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During a post-application update, a compliance analyst encounters an ARM Features and Terms issue. Which response should explain the required action to the team?

Correct Answer

A) Treat negative amortization as a material risk feature

ARM products use an index, margin, adjustment periods, caps, and payment-change disclosures. The best answer is "Treat negative amortization as a material risk feature".

Answer Options
A
Treat negative amortization as a material risk feature
B
Apply a different loan-program rule without checking the file facts.
C
Delay the ARM Features and Terms step until a later document-retention review instead of acting now.
D
Use the same treatment for all mortgage products without comparing program requirements.

Why This Is the Correct Answer

ARM products use an index, margin, adjustment periods, caps, and payment-change disclosures. The best answer is "Treat negative amortization as a material risk feature".

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