You said your company doesn’t do neg ams, but have you seen what your competitor’s offer? On Ben’s blog a poster claimed that the 110% cap doesn’t just apply to the negative amortization, but that (at least some) lenders can demand a reappraisal and accelerate the payments if prices fall (basically, a margin call). If that’s true then a lot of borrowers will be very surprised.
Also, how well do you think pepole understand prepayment penalties? Do they realize that they should get a break on the rate if they agree to one? Do they get talked into refinancing even if they have a big prepay penalty, or a penalty that’s about to expire?
