Historical Scenario


Definition of "Historical Scenario"

Jean Andrews & Christine Joyce real estate agent
Jean Andrews & Christine Joyce, Real Estate Agent Champion Realty Inc.

The assumption that the index value to which the interest rate on an ARM is tied follows the same pattern as in some prior historical period. In meeting their disclosure obligations in connection with ARMs, some lenders show how the mortgage payment would have changed on a mortgage originated some time in the past. That is not very useful. Showing how a mortgage originated now would change if the index followed a historical pattern would be useful, but nobody does it.

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