After 4 years he can take his $1 MIllion assets plus whatever gains (maybe 1.2 M after 4 years) and pay off the loan if it resets too high. OR if his house dropped in half or more by price, he can walk away, and buy his house as a REO or buy a similar one using all cash, and still have about 700K left laying around.
It’s really a no-lose proposition for people in his situation.
