These neg-amortization/pay-option ARM loans can also offer the most points to a greedy loan officer.
They often do. But, doing that puts the fully indexed rate about a point higher than 30 year fixed...
Actually, from a loan officer perspective they were the worst paying loans as you had to get the borrower to agree to a pre-payment penalty to get anything approaching the Yield Spread you could get on a regular fixed or ARM.
I could easily make 2% on the back with an ARM. But with a pay option I would be lucky to make 1%. Often less because I wasn't going to try and tack on a pre-pay because thats just bull.