Final answer:
The statement provided is true; a loan that offers lenders a share in the property's value appreciation is known as a shared appreciation mortgage, which is distinct from an adjustable-rate mortgage (ARM) where interest rates vary with market rates.
Step-by-step explanation:
The statement is true. A participation loan in which the lender conditions its loan commitment on receiving a sizable percentage of the property's appreciation in value is indeed known as a shared appreciation mortgage.
This is different from a traditional adjustable-rate mortgage (ARM), which is a loan used to purchase a home in which the interest rate varies with market interest rates.
The key difference lies in how the lender benefits: with a shared appreciation mortgage, the lender shares in the increased value of the property.
Whereas with an ARM, the lender may adjust the interest rate to reflect changes in the inflation rate and protect against the real value of the payments decreasing over time.