T.B., the owner of a mortgage-financing company, says:
I have to chastise my fellow mortgage professionals for their money-hungry nearsightedness. The interest only and option-ARM (pick your payment) loans are going to come back to haunt the majority of those who have chosen to use them. The default rates on those homes will be far and above the average.
In all the years that I have been in the finance/mortgage business, I have only done one interest-only loan, and I refuse to do an option-ARM loan no matter how "sophisticated" the borrower is. The potential for negative amortization has no place in my book. The mortgage companies and lending institutions that are heavily promoting these loan programs don't care about the borrower (their customer!); all they care about is making a fast buck.
Take my word for it, Seth, the majority of all the Johnny newcomer mortgage people will be out of business once rates start moving up. Unfortunately, we have to live with them for now. I can only sit here and feel sorry for the majority of borrowers who have been conned into interest-only and option arm programs.
Amen brother! Amen. T.B. is being very responsible. I hope he makes a high income and is not undercut by the major competition from all these irresponsible lenders.