What can be done with mortgages with minimum payments that don't cover the interest on the loan?

its legal, your friend has to pay more than the minimum to get out of the loop. tba

each loan is different. There are adjustable prices from 1yr all a thanks to ten years. meaning it may nicely be 10 years before the first adjustment. maximum folk pretty contained in the sub best marketplace are in a 2 or 3 365 days fixed cost even if in the adventure that they have pastime purely on those loans the various i/o funds received't adjust until eventually 5 years. I/O funds could be set for 10 years as well. it actual relies upon on who's the lender and how the interest change into drawn up at settlement. We do understand this. We havent considered the more severe yet.

It is legal unfortunately -- does your friend understand this???

But she doesn't have to pay the minimum. There are 4 payment options -- minimum payment, interest and principal, interest only, and interest and principal with intent to pay off in 15 years (something like that). Pay at least the interest if cash is tight. That way, your principal doesn't get any bigger, while your equity shrinks.

This whole sub-prime thing is a mess! I wonder what the next scam will be?

It is not necessary illegal.

That depends on the State Usury laws where the mortgage was signed, if there are any left.

Unethical? Definitely.

Enforceable? Probably not if a good attorney gets his hands on the mortgage.

She needs much more help than a site like this can provide. She needs to talk to a lawyer, most of whom will talk initially for free. But I would think, that this might have class action potential.

Note: I am not an Attorney and my only advice is to consult one who specializes in contract law.

Yes, it is legal. It is also the basis for much of the financial trouble we are seeing right now.

The only ways to avoid this situation are to refinance the loan or to pay more than the minimum payment. Otherwise, your friend will never be able to get ahead of this nightmare.

I don't know if it's legal or not. It doesn't sound fun though.

Looks like your friend needs to start paying at least 10k more per year, or look to refinance when the interest rate is lower, or get a different house or whatever it takes to not get 10k more in debt each year.

Criminal isn't it....worse yet...some of those mortgages have prepayment penalties.....unless their income goes up to make a true mortgage payment....it's a vicious cycle that won't end until they walk away....

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It's called Negative Amortization, and it is legal. Not very smart but legal.

Get rid of them at all cost, in the long run you will benefit. x