Mortgage borrowers know that they don't know much |
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Education's the key
The need for consumer education underlies all three of these surveys:
Radian's, which found that homeowners wish they knew more about
mortgages; Freddie Mac's, which reported that delinquent borrowers
don't know their options, and LendingTree's, which uncovered confusion
about all kinds of debt.
But who should do the educating? Radian recommends "lenders
and others in the financial services arena." Freddie Mac devotes
a section of its Web site to consumer
education, including tips
on avoiding foreclosure. LendingTree has a section of its Web
site called the Knowledge
Center.
Want to test your knowledge now? Bankrate has built
a five-question "Personal
finance quiz" that will tell you how much you know -- or
don't.
"We want to be the consumers' advocate and adviser,"
says Doug Lebda, chief executive of LendingTree. "We think
we're in a better position to do that the more we know about what
consumers need and want in the market."
That, he says, is why the company commissioned Manning's
report. It's the first part of a multiyear program to teach people
money-management skills.
No quick fixes
For his part, Manning has no quick solutions. He has helped develop
financial literacy programs for college students, and he concludes
his report by writing that "it's never been more important
for borrowers to arm themselves with knowledge and build sound financial-management
skills."
But getting consumers to arm themselves with knowledge is a difficult
task.
Radian's survey was conducted online by Harris Interactive.
It is a self-selected sample and so is not a random sample of Americans.
Freddie Mac's telephone poll was conducted by Roper among 2,031
homeowners age 18 and older. The margin of error of the total sample
is plus or minus 3 percentage points. Manning's study took the form
of questionnaires, interviews and focus group sessions involving
145 people in various stages of life in Rochester, N.Y.; Alexandria,
Va., and Orlando, Fla.
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