I think it’s safe to say that I’ve been following the mortgage meltdown, financial crisis, whatever you want to call it pretty closely since near about the beginning. I was in and out of fancy hotels across Europe, watching a lot of BBC business news, when the stock markets started crashing last September. And yet it wasn’t until today that I saw for the first time the phrase “negative-amortization mortgages.”
Just to spell it out, that’s when your monthly payments don’t even cover the interest. So instead of your balance going down a little bit every month, it goes up. And I guess it’s a testament to the incredible adaptive power of the human mind that we can now all see how that’s not really a great idea.