negative amortization loans in the spotlight
it looks like the comptroller of the currency is starting to look seriously at the risks of negative amortization loans. we got the sense from this frontline documentary on the credit card industry that the comptroller of the currency generally hasn’t been the strongest regulator of the banking industry, but it will be interesting to see what changes if any come about.
UPDATE: more coverage over at calculated risk.
January 6th, 2007 at 11:42 am
Negative Amortization is a real issue where the mortgage payment is smaller than the interest that is due, which in turn means the loan increases rather than decreases. There are a number of factors that contribute towards this including interest rate fluctuation.
Im unsure as to how much of a common problem this is though?