Mortgage customers don't know what they're doing

Back in October, The Federal Reserve released a startling -- and widely ignored -- study showing that a large chunk of recent home buyers know almost nothing about their mortgages. Here are some findings from the Fed's survey:

  • 25% could not identify the APR on their mortgages.

  • 25% didn't know how much they spent on settlement charges.

  • 50% didn't even know much the loan was for.

  • Two-thirds were unaware of any prepayment penalties.

  • 75% did not recognize that the loans included charges for optional credit insurance.

Major, major props to Forbes' Josh Zumbrun for digging this up. Zumbrun adds that "It's a point you don't hear much about. Yes, lenders maliciously tricked borrowers, and yes, frenzied speculators bought houses they knew they could not afford. But it's just as true that a lot of well-intentioned people simply signed mortgages they did not understand."