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A 5/1 is an adjustable mortgage and this was a 5 year BALLOON.

Before I started lending money I had heard the term "balloon loan". but didn't fully know what it meant.

Federal regulations forbid a balloon mortgage on a consumer loan secured by a primary residence, except for small rural lenders.

I know the lender had more than $2 billion in assets and I am pretty sure that they do more than 500 mortgage loans on primary residences therefore they can't do balloons on primary residences.

Also the interest rate was 5.5% so it wasn't a qualified adjustable.
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