The "exotic" mortgage instrument of recent years is exemplified by the

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The "interest-only" mortgage is considered an "exotic" mortgage instrument because the borrower is only required to pay the interest on the loan for a certain period of time, typically the first few years of the loan term. After that, the borrower begins to pay both principal and interest, resulting in a significant increase in monthly payments. This type of mortgage was popular during the housing bubble of the mid-2000s and was often used by borrowers who could not afford the payments on a traditional mortgage.

The "Exotic" Mortgage Instrument of Recent Years Is Exemplified by the