Which of the Following Clauses Leads to Higher Risk for an ARMs

question 23

Multiple Choice

Which of the following clauses leads to higher risk for an ARMs lender?

• A) Negative amortization is not allowed when interest is not covered by the payment due to a payment cap
• B) There is floor for payments
• C) Adjustment interval is longer than one year
• D) All of the above

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Definitions:

Cohabitation rates

The statistical measure of how common it is for couples to live together without being legally married.

Parental remarriage

The act of a parent getting married again after a divorce or the death of their spouse.

Remarriage

The act of getting married again after a divorce or the death of a spouse, often creating blended family structures.

Identities

The attributes, convictions, demeanor, appearance, and/or mannerisms that constitute an individual’s (personal identity) or collective’s (specific societal class or social group) essence.