We Gotta Million Of 'Em
Neutron loans, they call 'em. Bloomberg (02.07.08), via Eschaton:
"Joe Ripplinger took out a $184,000 mortgage in 2006 and makes his payments every month. Now he owes $192,000." Exploding ARMs Roil Bernanke's Drive to Calm Markets"The 66-year-old Minneapolis house painter has a payment-option adjustable-rate mortgage. It allows him to write a check for $565 a month even though he owes $1,300. The difference is added to the mortgage, and when his total debt reaches $212,000, or after five years have passed, he said his monthly minimum could jump to about $2,800, which he can't afford." Neutron loans? "'We call them neutron loans because they're like a neutron bomb,' said Brock Davis, a broker with U.S. Express Mortgage Corp. in Las Vegas. 'Three years later the house is still there and the people are gone.'"