The idea is sound, but it sucks. This allows the loan writer, and the Real Estate agent to max out a new buyer and have him upside down in 5 years when he’s ready to sell.
Its like being sold a pair of shoes that are too tight–they will stretch.
As a refi tool where the house owner makes a free willed decision (without a realtor trying to hook a commision and a kickback from the lender)it could work out pretty good.
