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Pastimes : Clown-Free Zone... sorry, no clowns allowed -- Ignore unavailable to you. Want to Upgrade?

To: Roads End who wrote (97432)	4/23/2001 7:11:26 PM
From: patron_anejo_por_favor	Read Replies (2) \| Respond to of 436258

FNM finds new and creative ways to keep the mortgage lending bubble afloat: biz.yahoo.com <<Monday April 23, 6:19 pm Eastern Time Fannie Mae offering deferred-payment mortgage WASHINGTON, April 23 (Reuters) - Mortgage finance giant Fannie Mae (NYSE:FNM - news) is offering a mortgage that lets home buyers make a lower monthly payment at first in exchange for higher payments later and a slightly higher interest rate on the loan. The product, InterestFirst Mortgage, will be available through Fannie Mae's mortgage lending business partners, the financial institution said in a statement on Monday. Borrowers will be able to get a 30-year fixed rate mortgage and make payments on interest only for the first 15 years of a loan. After 15 years, the mortgage payment is recalculated to include both interest and capital. The borrower's monthly payments would then become higher. ``The InterestFirst mortgage is ideal for borrowers seeking lower monthly payments and the interest rate stability of a 30-year fixed rate loan,'' said Lynda Horvath, Fannie Mae senior vice president for new products for single family mortgages. It is aimed at people who want to be able to have to write a smaller mortgage check each month, Fannie Mae said. Lenders say the mortgage will be attractive to home buyers in high cost housing areas or those who expect to move within a few years, according to Fannie Mae. The mortgage finance institution says that under current rates, payments on a $200,000 30-year fixed-rate mortgage would drop from about $1,347 to around $1,229 initially, about $118 less a month. At the same time, the interest rate on the mortgage would be slightly higher, Fannie Mae said. The new product would be available for mortgages up to 95 percent of the appraised value of a home.>> Looks to me like the goal of this is to encourage residential RE speculation by those who are stretched financially, and plan to flip the home in a year or two. Is this type of lending prudent in an economy plunging headlong towards recession to borrowers carrying record debt levels? I think not!