A few years after risky mortgages and related investments led to a global financial collapse, the Federal Reserve put out a handbook to help consumers make smarter choices about their home loan options. The focus was on adjustable-rate mortgages, whose exotic variants were among the prime culprits in the meltdown.
“To compare two ARMs or to compare an ARM with a fixed-rate mortgage,” the handbook states, “you need to know about indexes, margins, discounts, caps on rates and payments, negative amortization, payment options, and recasting (recalculating) your loan.”
Wait, what?
