What the risks are to the lender who makes this type of loan

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Reference no: EM131923993

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

Reference no: EM131923993

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