Lee, 1999, Financial Counseling and Planning, v. 10 (1)

Lee, J. & Hogarth,
J. M. (1999). Returns to information search: Consumer mortgage shopping
Financial Counseling and Planning, 10(1), 49-66.

Returns To Information

Consumer Mortgage Shopping

Jinkook Lee(1)and
Jeanne M. Hogarth(2)

The Truth in Lending Act (TILA) and the Real Estate Procedures Act
(RESPA) promote informed consumer decision making in mortgage markets,
primarily through disclosure of information. The effectiveness of currently
provided information under TILA and RESPA was examined using the 1995 Federal
Reserve’s Survey of Consumer Finances. Specifically, we investigated the
relationships between consumers’ extent of search and the annual percentage
rate (APR) of primary mortgages. Increased search paid off for refinancers,
but not for other financers.

Key words: Mortgage loans, Credit, Decision making, Information search,
Survey of Consumer Finances

1. Jinkook Lee, Associate Professor, Consumer
and Industry Services Management, 1215 W. Cumberland Ave. #230, University
of Tennessee, Knoxville TN 37996. Phone 423-974-4594, E-mail: jinkook@utkux.utk.edu

2. Jeanne M. Hogarth, Senior Analyst, Consumer
& Community Affairs, Federal Reserve Board, Washington DC 20551. Phone
202-785-6024, E-mail: jeanne.m.hogarth@frb.gov

The analysis and conclusion set forth are those of the authors
and do not necessarily indicate concurrence of the Board of Governors,
the Federal Reserve Banks, or members of their staffs.The authors thank
Glenn Canner and Martha Starr-McCluer for their helpful reviews and Kevin
O’Donnell and Bruce Gilson for their technical assistance. The funding
for this project was supported by a Faculty Development Award, the University
of Tennessee.

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