Lenders used misleading tactics in advertising home loans during the U.S. subprime mortgage crisis, according to a new study by a UT Dallas professor.
Dr. Umit G. Gurun, professor of accounting and finance in the Naveen Jindal School of Management, co-authored "Advertising Expensive Mortgages," recently published online in the Journal of Finance.
According to the study, borrowers spent on average $7,500 more on a $250,000 mortgage when taking an advertised "low-rate" mortgage, compared to an identical mortgage that was not advertised.