> If people borrow a reasonable amount of money at a fixed
> rate to buy a house they can comfortably afford, that's one
> thing. If they stretch beyond their means in the hope that
> 1) their income rises, 2) rates stay low or fall even, and/or
> 3) prices appreciate, they're being insanely reckless with
> their primary residence.
I think there's a vast gulf between those two poles ("reasonable, fixed-rate, comfortable" vs "stretch, insanely reckless"), and it probably contains the majority of people who get negative amortization adjustible rate mortgages (herinafter NAARM).
> If they want to gamble, there's Vegas or the CBOE.
There's that word gamble again. You're way off the mark on this one, unless you can show me some numbers coming out of NAARM that look anything like how Harrah's does on the blackjack table. Feh.
Oh, and the S&Ls didn't invent negative amortization, the credit card companies did. Also: if there was a signifcant default rate on these things, the banks wouldn't underwrite them. And if they do, they wouldn't do it for long. And if they did, they deserve what they get!
/jordan