COMMERCIAL BANK PRACTICE & POLICY QUESTION.
Listed below are expected monthly payments associated with a 30-year option-ARM loan made to a residential home buyer in 2008. Use this information to explain what an option- ARM is and what the risks are to the lender who makes this type of loan?
Year Monthly Payment
1 $1,222
2 $1,313.65
3 $1.412.17
4 (and beyond) $3,079.41