What does it cost consumers/borrowers in the U.S. annually for not
getting into the best mortgage loan that they qualify for, meaning
that they get taken advantage of and placed into a loan with higher
rates and/or excessive fees?  Can you provide all and any
research/stats on this topic.  Research on lender fraud and
malpractice would be appreciated.

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Clarification of Question by chancho-ga on 17 May 2006 23:59 PDT

As someone pointed out, the research should surround the topic of
predatory lending.  Any and all research, statistics regarding this
kind of abuse.

What you are talking about is not fraud.  Unless they are outright
lied to, no fraud is involved.

In the UK we had the miss-selling of endowment policies
- also one off 'mortgage insurance' which insured against nothing

Both were pretty close to frauds, as they were deliberately
mis-representing the products.

Its like going to a gas station and paying $2.54 for a gallon of gas
when the one down the street is selling it for $2.50.

Its not fraud.  Shop around for the best price.

I think Chauncho is referring to 1 lender charging various rates to
equally qualified borrowers.  That could fall under price
descrimination.  I don't know much about laws, but I'd like to think
that price descrimination is illegal in some forms.

It's not like Shell selling gas for $2.50 while Exxon is $2.54... it's
more like Exxon selling their gas to me for $2.54 at one pump while
selling it to you for $2.50 at the next pump over.

To clarify, I am looking for info regarding any type of consumer fraud
on the part of lenders. The data can include price discrimination
situations, but can be more expansive.

On a side note to MR SHOPPER:
As for price shopping, mortgages are a more complicated product and
not standardized across the industry, which makes it difficult to
compare, specially when various lenders obfuscate the true cost of the
loan.

No two people are going to have the same income, expenses, credit
history, employment history, etc.  Price discrimination is probably
not as widespread as you think (nor as uncommon as I would like to
image, perhaps).

I think what you are referring to is typically called "predatory
lending".  That would be the area in which I would investigate this
sort of thing.  Here's some definition to that area in Wikipedia in
case it helps.

"In the strictest and legal sense, predatory lending refers to secured
loans such as home or car loans which are made by the lender with the
intention that the borrower will not repay the loan, allowing the
lender to seize the car or home and sell it for a profit.
Colloquially, the term has been expanded to refer to the practice of
convincing borrowers to agree to unfair and abusive loan terms. ...
en.wikipedia.org/wiki/Predatory_lending"

Basically, I agree with Nelson's comments.  
We have seen here questions about dubious practices, such as
additional costs after the buyer/borrower has virtually committed
himself and probably not find different financing before the signing
date on the house contract.

And I have no doubts that there are borrowers who could find cheaper
financing if they were more agressive at bargaining or searching the
market  (i.e., people rather like me).  Some of people may never know
or care  - or know AND care, but are still not upset because they
figure they got a good deal on the price or understood that they were
accepting the deal they could get in the timeframe they needed.

Chancho,  you are getting various scenarios, but no answer.  Maybe
there are estimates on the number of mortages that were not the best
option available to the individuals when compared with credit ratings,
etc., but as Nelson points out, and I have tried to indicate, there
are many factors involved that can justify this for the individual
deal, also in the eyes of the borrower, so that malpractice or fraud
cannot considered to be involved.

I was formerly a loan officer, and trust me, many people knew they got
screwed, but it was not due to lack of research or effort on their
part. Usually the story goes that they are presented one thing up
front to hook them, but when it comes to signing the final paperwork,
they find themselves with different terms. Unfortunately, some people
are under various pressures to get the loan done.

I got screwed like that

Foolishly I decided to remortgage, I used a friend who is a solicitor,
at the very last minute (literally as signing) he demanded a one off
insurance premium which was of no value to me.

Normally I'm pretty careful, but it was totally unexpected.