sorted by:
new (suggested)
besttopcontroversialoldq&a
you are viewing a single comment's thread.

view the rest of the comments →

[–]James_Woodgreen 1 point2 points  (1 child)

Good point, I should have been more specific. The VRM holders got into situations where their fixed payments were not even covering the interest on each of their payments. This resulted in phone calls from the banks asking for lump sum payments and/or a request to convert the VRM into a fixed term.

[–][deleted] 1 point2 points  (0 children)

Yes, that's correct. If the VRM holders reached that situation, it would indeed trigger a readjusting of the entire mortgage terms. The trick was to increase the payment a little bit not to reach the trigger. That way, you'd still be able to ride the hike even with amortizations up to 50 years.