[quote=sdnerd][quote=arnie]When an arm loan resets does the lender look at LTV ratios when determining the new interest rate? If so, I can’t imagine a lot of people getting more attractive rates if the homeowner has lost a significant amount of equity. Doesn’t a high LTV, by definition, make it a more risky loan?[/quote]

You adjust on an index, + whatever your base is. [/quote]

When I worked for a broker (a shady broker at that) I was in charge of making sure the paperwork reflected the correct information. The terminology is margin plus index equals fully indexed rate. I was in charge of calling all the lenders who have since gone out of business to verify the margin and for sub prime the average margin was 6% plus LIBOR (London Inter Bank Offer Rate) so even if LIBOR was 0.0% you still go from a 5% to a 6%. I’m sure the margin wasn’t as high on conforming loans. Then again why would a broker go to a conforming lender when there were so many fly by night ones with cool sounding names (BNC, AMC (argent), WMC, D-1, Oak Street, First Franklin, IRES, MILA, Accredited, etc) with hot young female AE’s giving away pens, clocks, mini-basket ball hoops, cell phone lawn chairs (no joke) with their companies logo on it? Plus they wanted to maximize their own paycheck not the well being of their borrower they met one night telemarketing.

I wonder if I’m going to hell for working for them even though I didn’t sell loans?