Does Refi Advertising Help or Hurt Borrowers and Lenders?

Posted To: MND NewsWire

"Mortgage borrowers frequently make costly refinancing mistakes by either refinancing when they should wait, or by waiting when they should refinance." That is the working premise of a paper published as part of the Federal Reserve's Finance and Economics Discussion Series. The paper, by Serafin Grundl and You Suk Kim, is titled "Consumer Mistakes and Advertising: The Case of Mortgage Refinancing." Consumers, the authors say, tend to make mistakes and companies engage in various activities that can encourage mistakes, exploiting the biases of consumers to sell them overpriced products or those they don't need, or conversely prevent mistakes by encouraging beneficial actions. Policies that restrict or regulate advertising can help the consumer, but where firms have an incentive to help consumers...(read more)

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from Mortgage News Daily http://ift.tt/2ty8CVN