Is this the first you’re hearing of an interest only mortgage? They have been very popular in Southern California for a couple of decades. The theory is that it allows the speculator / owner to get a much more expensive home and just pay the interest for 3 to 10 years. Then sell and reap the massive appreciation. Except of course when the market goes the other way and you’re underwater and then whoops! the payment flips to fully amortized (interest and principal) and you can’t afford it.

Welcome to 2007! But don’t worry you’ll be unemployed in another year too!