If you know that going in, that’s one thing. Too many didn’t either out of ignorance or bad/deceptive marketing.
There is a place for a negative-amortization loan. That place is for investors who have a LOT of net worth and are leveraging their money.
They’re NOT for Joe and Jane Smith living paycheck to paycheck or barely better than that.
I agree! Unfortunately, a lot of Joe/Jane Smiths became convinced that "they could get rich quick" (watching too many infomercials, etc.). Sadly, the "Ever Skyrocketing Real Estate Values" are not skyrocketing enough (sic) to allow them to make their fortunes by selling to a "greater fool"!
Mortgage brokers were more than happy to write any manner of mortgages for them and pass the "trash paper" on to CMO "Wizards" who, in turn, have "passed the trash" to investors who really don't know what they truly own now (and won't for quite some time!)