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FTC Agrees: Mortgage Disclosure Is Poor

I wrote recently that federal banking regulators missed a good opportunity to clarify for borrowers how much different kinds of loans will cost them, especially ones with those highly misleading teaser rates.

Turns out the Federal Trade Commission is also concerned about the poor disclosure of mortgage loan information.

Two days ago, the FTC issued a study which found that:

**Half the 819 borrowers surveyed could not correctly identify their loan amount.

**Two-thirds did not recognize that they faced a two-year prepayment penalty.

**Three-quarters did not recognize that they were paying extra for optional credit insurance.

**Nearly 90% couldn’t identify the total amount of upfront charges in the loan.

It’s easy to blame the borrowers, and I’m sure some people who read this post will do exactly that. But when so many people can’t understand the loan documents, I put most of the blame on the lenders.

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