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James M. Lacko, Janis K. Pappalardo

This study presents the results of 36 in-depth interviews with recent mortgage customers, and quantitative consumer testing with over 800 mortgage customers, that examined how consumers search for mortgages, how well consumers understand current mortgage cost disclosures and the terms of their own recently obtained loans, and whether better disclosures could improve consumer understanding of mortgage costs, consumer shopping for mortgage loans, and consumers’ ability to avoid deceptive lending practices. The results of the study show that current mortgage cost disclosures fail to convey key mortgage costs to many consumers, and that prototype disclosures developed for the study significantly improved consumer recognition of mortgage costs, demonstrating that better disclosures are feasible.