Wachovia Corp. Stops Mortgage Payment Option
Beleaguered consumer bank Wachovia Corp. will quit offering a mortgage payment option that allows borrowers to pay less each month than the bank charges in interest.
The Dallas Morning News also state that 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 told The Associated Press on Monday that it will no longer offer the less-than-full interest payment option on all new home loans.
Critics have said such paying less than the amount of interest charged can lead to negative amortization, in which the borrower owes more than the value of their home, increasing the chance of foreclosure.