Many Borrowers Have Suffered Financially as a Result of Adjustable

question 74

Essay

Many borrowers have suffered financially as a result of adjustable rate mortgages and option ARM's.Some borrowers purchased homes based on low introductory rates and then suffered payment shock when interest rates increased and so did their monthly payments.Option ARM's allowed borrowers to make payments that did not even cover accruing interest on the mortgage,resulting in negative amortization in some cases.Should the federal government regulate adjustable rate mortgages and option ARM's? Why or why not? Support your reasoning.

---

Definitions:

Obvious Theft

A situation where an act of stealing is clear and unmistakable to any observer.

Audit

A systematic examination and verification of a company's financial records, performance, or compliance with legal requirements.

Qualified Opinion

An auditor's statement that accompanies a company's financial statements, indicating that most parts of the financial statements are accurate, but there are reservations.

Working Papers

Documents that prove a minor's eligibility to be employed under the labor laws, often required in many states for individuals under a certain age.