{"id":1420,"date":"2007-05-12T23:04:13","date_gmt":"2007-05-13T06:04:13","guid":{"rendered":"http:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/?p=1420"},"modified":"2007-05-13T12:21:09","modified_gmt":"2007-05-13T19:21:09","slug":"can-i-ease-out-of-my-pay-option-loan","status":"publish","type":"post","link":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/1420\/can-i-ease-out-of-my-pay-option-loan\/","title":{"rendered":"Can I ease out of my pay-option loan?"},"content":{"rendered":"

Heard this one before? I tell you what, if I had a nickel… skip it, you know what I’m saying. During the last few years home owners, especially in areas with exceptionally low levels of housing affordability, have flocked in droves to the “dreaded” pay option mortgage. Now with recasts looming, interest rates rising, and equity dripping away, more and more home owners are calling me asking how they can still afford their home AND stop losing equity. <\/p>\n

A quick thought on the “dreaded” pay-option mortgage. Negative amortization gets a bad rap these days. The mainstream media loves these loans because they are the ideal poster-child of a mortgage market debacle. Think about these loans for a minute: they eat home equity, have high interest rates (usually), are confusing, and make the people who sell them A BOAT LOAD of money. That sounds like music to a reporter’s ears. And so they get a bad rap. <\/p>\n

While I generally dislike pay option loans<\/a>, it’s not the loans themselves; it’s how they are (mis)used. To be sure, neg-am pay-option loans have a place in the lending spectrum; but I believe that place to be with the short-term, savvy investor, playing the flipping game in a rising market, not with the family of four trying to buy a bigger house in San Francisco while working with restrictive cash flows. The problem is that the people calling me are not the savvy investors; it’s the family of four that took a neg-am loan, got addicted to the minimum payment option, and now is in a world of hurt.<\/p>\n

These people chose the pay option for either the low payments, the low fees (with a commission north of 3 points on the back of these loans, anyone charging front points with a full margin is sadistic), or they liked the idea of choosing their payment option each month. Most people in the payment-option loans made two critical mistakes: 1. they took the loan for a property they planned on staying in for a long time and 2. they lacked the will power to make anything more Read more<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

Heard this one before? I tell you what, if I had a nickel… skip it, you know what I’m saying. During the last few years home owners, especially in areas with exceptionally low levels of housing affordability, have flocked in droves to the “dreaded” pay option mortgage. Now with recasts looming, interest rates rising, and […]<\/p>\n","protected":false},"author":22,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_crdt_document":"","jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[26],"tags":[],"class_list":{"0":"post-1420","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"hentry","6":"category-lending","8":"no-featured-image"},"jetpack_featured_media_url":"","jetpack_sharing_enabled":true,"jetpack-related-posts":[{"id":10553,"url":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/10553\/the-rates-arent-the-only-thing-that-matters-my-thoughts-on-how-to-create-healing-in-the-housing-market\/","url_meta":{"origin":1420,"position":0},"title":"The Rates Aren’t The Only Thing That Matters….. (My thoughts on how to create healing in the housing market)","author":"Tom Vanderwell","date":"December 14, 2009","format":false,"excerpt":"A couple of thoughts about this article from the New York Times: It\u2019s true.\u00a0\u00a0 Anecdotally, I\u2019d have to say that depending on the day, anywhere from 30-50% of the people who I discuss refinancing with are either not able to do it because their income has fallen or because property\u2026","rel":"","context":"In "Dirty Laundry"","block_context":{"text":"Dirty Laundry","link":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/category\/dirty-laundry\/"},"img":{"alt_text":"","src":"https:\/\/i0.wp.com\/media.cnbc.com\/i\/CNBC\/Sections\/News_And_Analysis\/__Story_Inserts\/graphics\/__REAL_ESTATE\/home_equity.jpg?resize=350%2C200","width":350,"height":200},"classes":[]},{"id":1343,"url":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/1343\/confessions-of-an-arms-dealer\/","url_meta":{"origin":1420,"position":1},"title":"Confessions of an ARMs Dealer","author":"Brian Brady","date":"April 24, 2007","format":false,"excerpt":"Strategic Equity Positioning is a buzz phrase in the mortgage industry today. The concept of equity management came from the book, Missed Fortune, by Doug Andrews. Andrews, a life insurance agent and financial planner, discovered a strategy that extracts equity from your home to fund tax deferred investments. The response\u2026","rel":"","context":"In "Real Estate"","block_context":{"text":"Real Estate","link":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/category\/real-estate\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":1558,"url":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/1558\/pay-the-loan-down-and-refinance-later-the-irs-is-out-to-getchya\/","url_meta":{"origin":1420,"position":2},"title":"Pay the Loan Down and Refinance Later? The IRS is Out To Getchya !","author":"Brian Brady","date":"June 21, 2007","format":false,"excerpt":"Rising real estate prices and serial \"cash-out\" refinance transactions has the IRS licking their chops. Mortgage interest deductions are limited to the acquisition indebtedness plus a maximum of $100,000 for home equity indebtedness. Scofflaws have taken advantage of the fact that the IRS is not able to track the segregation\u2026","rel":"","context":"In "Lending"","block_context":{"text":"Lending","link":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/category\/lending\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":2708,"url":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/2708\/the-beat-goes-onand-the-beat-goes-on\/","url_meta":{"origin":1420,"position":3},"title":"The Beat Goes On…and The Beat Goes On","author":"Brian Brady","date":"March 6, 2008","format":false,"excerpt":"The Fed reported that home equity is at its lowest since World War Two: Homeowners' portion of equity slipped to downwardly revised 49.6 percent in the second quarter of 2007, the central bank reported in its quarterly U.S. Flow of Funds Accounts, and declined further to 47.9 percent in the\u2026","rel":"","context":"In "Lending"","block_context":{"text":"Lending","link":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/category\/lending\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":11194,"url":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/11194\/cant-find-a-nut-search-in-a-nut-house\/","url_meta":{"origin":1420,"position":4},"title":"Can’t Find A Nut? Search In A Nut House","author":"Brian Brady","date":"February 6, 2010","format":false,"excerpt":"Mortgage squirrels, searching for some nuts, during what I believe could be a long winter, might consider this idea: There should be a lot of listings hitting the market when the shadow inventory eventually gets released.\u00a0 Banks are not very attentive sellers inasmuch as they care less about condition and\u2026","rel":"","context":"In "Lending"","block_context":{"text":"Lending","link":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/category\/lending\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":7569,"url":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/7569\/the-bad-bank-plancomplete-with-music-and-video\/","url_meta":{"origin":1420,"position":5},"title":"The “Bad Bank” Plan…..(complete with music and video)","author":"Tom Vanderwell","date":"March 23, 2009","format":false,"excerpt":"I've copied the announcement from the Treasury that sent the markets on a moonrocket today and thought that I would \"walk you through it\" so that we can get a better feel for whether this is a relief rally or something sustainable (and therefore what it means for mortgage rates).\u00a0\u00a0\u2026","rel":"","context":"In "Group Therapy"","block_context":{"text":"Group Therapy","link":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/category\/group-therapy\/"},"img":{"alt_text":"","src":"https:\/\/i0.wp.com\/straighttalkaboutmortgages.com\/wp-content\/uploads\/2009\/03\/ppip-chart.jpg?resize=350%2C200","width":350,"height":200},"classes":[]}],"_links":{"self":[{"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/posts\/1420","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/users\/22"}],"replies":[{"embeddable":true,"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/comments?post=1420"}],"version-history":[{"count":0,"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/posts\/1420\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/media?parent=1420"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/categories?post=1420"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/tags?post=1420"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}