SDEngineer may be on the right track, but I’m much too cynical to believe that. From the folks that I know that have these loans, about 3/4 of them can ONLY afford the neg-am payment. Usually the fully amortized payment is more than they make in a month. How else can you explain the HUGE discrepancy between median income and median home price? (I know SD Realtor, the medium income earner doesn’t buy the median home, but I think the point is still valid)
I’m sure the majority (71%?) of people with these loans were absolutely counting on future appreciation to bail them out.
