Are they sure? It sounded like such a good idea and thankfully regulators saw no problem with it either. Just because real estate is hitting new lows every week and the bank's stock price has dropped around 70%, there's no reason they should give in to common sense. Such practices would only encourage more common sense and then where would the banking industry be? Well, that's why they're paid the big bucks, courtesy of the American middle class. No matter how stupid or how costly or how ridiculous their half-baked ideas are, taxpayers will always be there to bail them out and fund their lifestyle. Ain't life grand for bankers?
The choice to pay less was one of the options of Wachovia's controversial Pick-A-Payment mortgages, which offer customers four different payment options each month. Wachovia (WB, Fortune 500) told The Associated Press that it will no longer offer the less-than-full interest payment option on all new home loans.
Critics have said paying less than the amount of interest charged can lead to negative amortization. That means the borrower owes more than the value of their home, increasing the chance of foreclosure.
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