The purpose of this study was to determine whether using a financial disclosure form in a controlled setting can influence consumers’ mortgage selection. This study used a 2 × 2 experimental design where participants were assigned randomly to a control or treatment group. Treatment group participants received a Federal Reserve Board document that contained information explaining the difference between an adjustable-rate mortgage (ARM) and a fixed-rate mortgage (FRM). All participants were presented with two distinct scenarios and were asked to determine the most appropriate mortgage for each. Logistic regression results suggested that receiving the Federal Reserve Board document does make a difference in consumers’ mortgage choice in hypothetical scenarios. Financial knowledge and Truth in Lending Act knowledge were also were important predictors.
Securitization and the Fixed-Rate Mortgage
