‘Exotic’ loans remain popular
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Despite the risks, borrowers are hardly shunning “exotic” loans that allow them to make minimal payments and that could leave them with more debt than they started with.
The Mortgage Bankers Assn. reports that about 26% of mortgage loan originations, by dollar volume, in the first six months of this year were interest-only.
Another 13% were so-called option adjustable-rate mortgages, which give borrowers a buffet of repayment options, including a minimum payment that doesn’t cover the full interest or the principal.
Critics warn that the monthly bill could double or triple for unwary borrowers.
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