more on the stupid loan business

Neutron Loans

Exploding Option ARMs.

Feb. 7 (Bloomberg) -- Joe Ripplinger took out a $184,000 mortgage in 2006 and makes his payments every month.

Now he owes $192,000.

The 66-year-old Minneapolis house painter has a payment- option adjustable-rate mortgage. It allows him to write a check for $565 a month even though he owes $1,300. The difference is added to the mortgage, and when his total debt reaches $212,000, or after five years have passed, he said his monthly minimum could jump to about $2,800, which he can't afford....

``We call them neutron loans because they're like a neutron bomb,'' said Brock Davis, a broker with U.S. Express Mortgage Corp. in Las Vegas. ``Three years later the house is still there and the people are gone.''

A million of these things out there...

(Eschaton)
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I don't mean to be uncaring, but who would be stupid enough to take on a loan like this? It is absolutely moronic! Just rent the house if you know you can't make payments! I honestly can't understand the thinking behind this.