I heard that the earnings reports from lenders ACTUALLY INCLUDE growth from neg-am mortgages… Is this true? For example, lets say you have one of those 1% specials. You happen to be a buyer who is making the minimum 1% payment on the loan, making a huge pile of debt on the backend. So when that loan resets (lets say it was a 5/1) your new balance will be a whopper. Lets just say you piled up an extra 50k on top of your original balance.
So what I have heard is that the lenders actually count this negative growth in thier earnings! Of course this totally inflates the earnings growth of the lenders. It also sets them up for a monster fall when these loans belly up.
My question is, does anyone know if this is true? That lenders report earnings in such a manner?
