Fixed-rate mortgages, adjustable-rate mortgages, and the axiom of risk-return trade-off

Article Abstract:

Investors have always viewed adjustable-rate mortgages (ARM) as a better financial alternative compared to fixed-rate mortgages (FRM). This assumption may perhaps be explained by the fact that ARMs provide investors with a great degree of portfolio flexibility, while giving them the capacity to deal with interest rate fluctuations. In fact, the federal government approved the use of ARMs in the 1980-82 thrift industry crisis to provide financial leverage to investors. However, borrowers must be discouraged from using ARMs, since their mortgage payments are exposed to high market risks with such kind of financial terms.

Commercial Banking, Business Financing, Financial instruments, Fixed rate mortgages, Adjustable rate mortgages

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"Bankruptcy-remote" clauses in real estate mortgages

Article Abstract:

"Bankruptcy-remote" clauses have become the norm in real estate financing arrangements involving mortgages. These special provisions act as safety measures to protect lenders from debtors who voluntarily file bankruptcy petitions without the permission of the board of directors. Such provisions may be effective if the lender exercises caution in the handling of such cases. Preparations include avoidance of direct handling of the property, permitting the debtor to select the property manager, meeting frequently with board members, and considering guarantees that become effective in the occurrence of a bankruptcy.

Bankruptcy Law, Other Justice, Public Order, and Safety Activities, Interpretation and construction, Laws, regulations and rules, Finance, Real estate investment, Real estate investments, Bankruptcy

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Useful web sites for the real estate professional: online mortgages

Article Abstract:

Web sites offering mortgage information are evaluated. They include www.ManhattanMortgage.com, www.nymch.com and www.bankofamerica.com.

United States, Marketing procedures, Evaluation, Web sites (World Wide Web), Information services, Web sites

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