Loans We Discourage Our Clients From Contemplating
The biggest problem with these kinds of loans is the actual interest rate accruing on the borrowed funds – the single most important easily measurable component of a mortgage – is not completely clear to the borrower. The structures are often actually sold in a misleading manner to conceal adverse effect to the borrower’s best interests.
Intrinsic structure of these loans is not an ethical or moral quagmire; the threat of duplicity comes rather via elevated transaction costs and interest expense relative to the most competitively priced instruments available as an alternative. In other words, people who borrow utilizing these kinds of structures could nearly always get a better deal doing something else.
