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Blog entries tagged with "negative amortization":
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Credit Suisse has reported that a second wave in the foreclosure crisis may be on the horizon. Option ARMs, which I've probably ranted about enough (see Wachovia Reigns In Pick-A-Pay Parts I and II), are scheduled to start resetting en masse around 2009, with the most reset volume coming in 2010-2011. … (6 comments)
Negative Amortization
Imagine being a buyer and obtaining your mortgage for a house. The papers are put in front of you to sign and who has time to read all that stuff?
(Pronounced: NEGH-ah-tive am-ohr-tih-ZAY-shun)
Negative amortization is the process by which a loan's principal balance increases on a month-over-month basis.
This is in contrast to a "typical" amortization schedule in which the principal balance decreases.
Negative amortization is an optional feature on some home loans.
These mortgages are usually referred to … (0 comments)
There are two surprisingly similar home mortgage options that seniors can consider to tap into their home equity: the reverse mortgage and the option ARM. The option-ARM has been frequently used by seniors to take cash out of their home equity since monthly payment amounts are much less than those of … (0 comments)
I can guarantee that if Donald Trump turned up tomorrow night at his favorite Manhattan restaurant with a toupee on, someone would notice. I don’t care if said hairpiece made his once bad come over look like hair as real as John Travolta. It could have been made by one of … (0 comments)
Wachovia has announced that they will now imposed minimum credit scores on products they did not have one in place. They did not disclose the specific products or what the scores are, but this does mean that Wachovia is getting tighter on offering mortgage loans.
Negative Amortization adjustable mortgages are looked at as if they are inherently evil in the current economic situation we find ourselves in. However, if you look beyond the surface, a case can be made that this type of mortgage will be a good bet for the foreseeable future.
By Dustin R Burke, Adonai Financial
Does Danger Lie Ahead? 
Florida Foreclosures
Negative Amortization implies an increase in mortgage debt when monthly payments on a loan are insufficient to pay off the interest accruing on the principal balance. The shortfall is added to the remaining unpaid balance to create negative amortization. For example, the monthly payment on a 30-year fixed rate mortgage loan … (3 comments)
With the record number of defaults and foreclosures occurring in today’s market, many homeowners have been led to believe that Option ARMs are bad loan products. The truth is that Option ARMs are great choices for some borrowers, but very dangerous choices for others. Whether they’re helpful and harmful depends primarily … (2 comments)
Lowest mortgage payment! Borrow $575,000 for $1677 per month > click here! Who are you trying to fool? $1677/month would be 3.5% per year. Does it sound too good to be true? Of course it does. Yet, this is the type of payment that is being advertised on the internet. This advertising is designed … (2 comments)
Can you really get a $200,000 mortgage loan for a payment that is only $644/month as Lending Tree is advertising. Can you really get a $150,000 loan for a payment that is only $450/month as Quicken Loans is advertising? You have probably all heard of these Pay Option ARM loans on … (0 comments)
There have been some big changes with sub-prime products and lenders over recent months. Many lenders have sold a high volume of loans to buyers who cannot keep up with their payments. This could be for a variety of reasons. Perhaps they had a very low credit score to begin with … (2 comments)
In recent years there has been a lot of controversy surrounding the Option Arm loan (aka Negative Amortization or "Neg. Am." loan). Some of the stories we've heard would almost have you believe that the loan was a living and breathing thing that devours homes and people alike. Like all loans, … (0 comments)
The point, from Aaron Krowne, founder of the Mortgage Lender Implode-O-Meter. The counterpoint, from Tobin Smith. Both provide good insights. On the counterpoint, it is important to keep in mind the overall size of the problem ($200-300 billion, as per Tobin Smith), versus other market catastrophes (the dot com bubble of … (3 comments)
From time to time, I am asked by clients, loan officers and real estate agents, what exactly is negative amortization or NegAm. 
I was mentoring a small group of people earlier today, the class was on referrabilty and "being referable". After the class was wrapping up, we talked to one lady a little more in depth... She was a Realtor, and a mortgage person she trusted had given her some REALLY bad advise to … (5 comments)
An option arm is an adjustable rate mortgage with the added flexibility of being able to choose from a variety of payment options from month to month. Option Arm's go by many different names including 'cash flow option loan', 'pick a payment loan', '1-month MTA', and so forth. The increased flexibility … (0 comments)
Today I logged onto my computer and was caught by a pop-up advertising a $350,000 mortgage for $999 a month. WOW! Normally, I shake my head and close them out. Or, when I see the advertisements on T.V., I change the channel. I had a reality check the other day when … (11 comments)
I have a friend that I work with that recently started blogging (is that the right term?). His passion and enthusiasm towards it made me curious as to what the attraction was to sharing one's thoughts and ideas in a public forum. He suggested I give it a try, so here … (9 comments)
A lot of borrowers will become giddy when they find that they can get a $300,000 loan for $758 using the 1% Option ARM, rather than paying $1847 for a 30 year Fixed loan. Deferred interest? Negative amortization? Unfortunately, most Mortgage Brokers cannot explain how a 1% Option ARM works. This … (3 comments)
Whether you're shopping for a new car, new carpeting, or a new mortgage, the airwaves and print media are overflowing with advertisements that seem too good to be true. Do people really get "Mortgage Rates Starting as low as 1%!", or "50% off on Carpet Installed Tomorrow"?
Countrywide continues to lead the industry as the innovator in loan products. 
“I am panicking. I recently put down $45K to buy my home and am beginning to feel as though it might not prove to be the best investment decision I have made. What will I do if home prices drop and my home is now worth less than when I brought … (2 comments)
I have seen a lot of controversy over "MMA type" mortgage accelerator programs here on Active Rain lately
If anything makes me spit nails these days, it’s the way lenders are pushing “Pay Option” Arms. Back in the day, if you uttered the words “negative amortization”, people would leap up and run the other way. Everybody knew somebody with a horror story to tell. So we shelved these … (0 comments)
There has been quite a bit of material written about the sinister mortgage programs called Option ARM's, or fixed payment mortgages. Dangerous, Predatory, Deceptive, ______ fill in the blank with your "watch out!" comment of choice. The general consensus on how these programs hurt borrowers is getting to be a little … (16 comments)