An ARMS index can be established by the lending institution making the ARM loan.

Question

Quizplus · Accepted Answer

The ARMS index (Adjustable Rate Mortgage Index) is a benchmark interest rate used to determine the interest rate adjustments on adjustable-rate mortgages (ARMs) and is not established by the lending institution making the ARM loan. Instead, it is based on various financial market indexes outside the control of individual lenders, such as the LIBOR, the Cost of Funds Index (COFI), or the Treasury Index.

An ARMS Index Can Be Established by the Lending Institution