Washington Mutual (WaMu) said yesterday that it has decided to eliminate the negative amortizing mortgage and WaMu Mortgage Plus loan options, according to published reports.
This is the latest change to the thrifts mortgage business to aid in its recovery from the current mortgage and credit market crisis.
Negative amortizing loans, otherwise known as adjustable rate mortgages or ARMs, offer very low introductory payments and allow borrowers to defer some interest payments until later years. Since monthly minimum payments on those mortgages do not cover the interest accruing on the loan, however, homeowners may ultimately owe more than they borrowed.
According to the reports, in an e-mailed statement, WaMu spokeswoman Sara Gaugl said the thrift was discontinuing that type of mortgage entirely because it has significantly decreased in popularity with our customers given current market conditions.
WaMu will, however, still offer two other types of adjustable-rate mortgages.
The thrift is also discontinuing its WaMu Mortgage Plus loans, or mortgages with built-in lines of credit and flexible payments.