Quote Originally Posted by beefsteak View Post
Yours truly finds this Donovan quote rather odd, and quite telling frankly. Here's why it's "odd."

I've personally sold real estate in the past (homes and farmland) at negative interest rates (also called teaser rates) in order to help a young family to get into my home after I'd already moved out and into another place. Of course, it was always accompanied by a 5 year balloon payment. So, said buyer "either would get caught up and pay me" OR I'd get the real estate back. All the while, I at least collected SOME interest on my former home, and at the same time it was NOT vacant, which would invite vandalism, etc., lowering my equity. So, the thought of banks "paying borrowers" is not a foreign one, nor one to be dreaded. The dread for the homeowner is the inevitable and always disclosed BALLOON payment. They had to sign a separate piece of paper stating that they understood at the time of signing that they were in this negative interest rate deal with me, as an owner.

The part I find quite telling is that this concept is being postured as some "new mortgage wrinkle" package.

In my mind, that is only "a wrinkle" in the eye of the inexperienced reader. In otherwords, this particular scenario --as I suspect many other current headlines-- is being packaged for the unawakened, and part of the overall "scare mongering" currently running rampant among the sheeple who has never sold RE this way.

Jis' sayin'
Balloons mortgages are for special circumstances and should only represent a small minority of outstanding mortgages. I almost employed one in 1983 when buying an apartment in Manhattan because of the super high interest rates on fixed mortgages. The balloon scared me into an adjustable rate mortgage instead and that worked out well in the end. But for people to consider balloon mortgages in the present environment of lowest fixed rates in decades is either madness or desperation. It's as if the society is so addicted to debt and credit that it would even sign on to negative interest rates just to buy more time, knowing that the balloon payment later is simply too gigiantic to pay back. Besides, everyone in reality is broke.