Monday, September 22, 2008

The Mortgages of the Future

Yesterday, Robert J. Shiller's editorial titled The Mortgages of the Future appeared in the NY Times' Business section. He calls for re-thinking and possibly re-structuring the typical 30-year mortgage into "continuous workout mortgages." These would adjust the mortgage balance and payment, automatically and systematically, in order to help homeowners continue to pay their mortgages even during harsh economic times.

I'm no economist, but hasn't this been tried many times before? Specifically, with the "negative amortization" loans that were so popular for so many years? Most folk with "neg" loans wound up owing more several years down the line than they did at the beginning of the mortgage. I guess I'd have to see one of these "continuous workout mortgages" in action before believing that this could work.

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