] More than a third of the mortgages written in the
] Washington area this year are a risky new kind of loan
] that lets borrowers pay back only the interest, delaying
] for years repayment of any loan principal. Economists
] warn that the new loans are essentially a gamble that
] home prices will continue to rise at a brisk pace,
] allowing the borrower to either sell the home at a profit
] or refinance before the principal payments come due.

] The loans are attractive because their initial monthly
] payments are tantalizingly low -- about $1,367 a month
] for a $320,000 mortgage, compared with about $1,842 a
] month for a traditional 30-year, fixed-rate loan. If home
] prices fall, though, borrowers could lose big.

] "People are buying houses like they used to buy cars,"
] said Alan E. Hummel, past president of the Appraisal
] Institute, who likened the process to buyers leasing a
] car. "They are renting the property from the bank, in
] this case," he said.

Decius was recently telling me about these loans. We both agreed they were a very stupid proposition. Apparently, they are catching on like wildfire, accounting for the bulk of homes sales in upscale areas. When the housing bubble bursts, the banks are going to own about 40% of your local upscale communities, and they are going to be selling for extremely low prices. Either that, or renting houses will become the norm once the ensuing banking scandals calm down, because that's pretty much what is happening right now..

America has officially given birth to Exurbia, defined by the "McMansion" and the "debt-hole".

] More than a third of the mortgages written in the
] Washington area this year are a risky new kind of loan
] that lets borrowers pay back only the interest, delaying
] for years repayment of any loan principal. Economists
] warn that the new loans are essentially a gamble that
] home prices will continue to rise at a brisk pace,
] allowing the borrower to either sell the home at a profit
] or refinance before the principal payments come due.

] The loans are attractive because their initial monthly
] payments are tantalizingly low -- about $1,367 a month
] for a $320,000 mortgage, compared with about $1,842 a
] month for a traditional 30-year, fixed-rate loan. If home
] prices fall, though, borrowers could lose big.

All those expensive ass houses everywhere that seem to have cropped up like weeds in the last few years despite the serious lack of an economic boom. Yeah. Those people are fucking doomed. There is a reason you don't own one. You're not an idiot.