Chapter-5--Adjustable-Rate-Mortgages(内含中文笔记).pptVIP

Teaser Rate vs. Accrual Rate 诱惑利率与实际利率 Negative Amortization Example 5-6, p.130 The difference between the teaser rate and the accrual rate will be added to the loan balance with interest.未被支付的利息以当时利率复利利息，加入到未偿还贷款余额中。 Loan balance may increase by an even greater amount because of negative amortization. 负摊还可能导致LB不断增加 “Payment Shock” 还款压力 Occurs if large increase in monthly payments occur on the reset date Example 5-6, PMT increased by 88.75% More serious for ARMs originated at teaser rates May result in financial difficulty and force the borrower to default ? Subprime Loan Crisis 4.4 ARM Payment Mechanics付款机制 The expected yield (cost of borrowing) is a function of: Initial interest rate Index Margin Any discount points charged at origination Frequency of payment adjustment (reset date) Caps or floors on interest rates, payments, or loan balances Lenders and borrowers may negotiate certain initial loan provisions that will be known at the point of origination and will affect expected yields (costs of borrowing) Once the provisions of mortgage loan have been negotiated协商, the magnitude of the effect on lenders and borrowers will be determined solely by future market conditions. 由未来市场情况决定 More Complex ARM Features, p.135 　 　 　 　 　 Contents ARM I ARM II ARM III FRM (a) Initial interest rate, or start rate 8% 9% 11% 14% (b) Loan maturity (years) 30 30 30 30 (c) Percent margin above index 2% 2% 2% – (d) Adjustment interval, or reset date 1 year 1 year 1 year – (e) Points 2% 2% 2% 2% (f) Payment cap None 7.50% – – (g) Interest rate cap None None 2%,* 5% – (h) Negative amortization – Yes – – * 2% maximum annual increase, 5% total increase over the loan term More Complex ARM Features, p.135 ARM I: neither payment cap nor interest cap ARM II: payment caps Reduces the payment uncertainty for the borrower ARM III: interest caps 2% maximum annual increase, 5% total increase over the loan term Interest risk assumed by lenders are greater than ARM II because payments ar