There is a new class of people in the United States. They are people I will call "Mortgaged Renters" for lack of a better term. These are the people with interest-only home loans or negative amortization loans. A generation ago, I suspect that such lending practices would have been unthinkable or at least very uncommonly available to individuals. But in reading a piece at Slate, I realize how brilliant this system is for lenders. The mortgage lenders are essentially the homeowners and the person who pretends to be the homeowner is really just a renter.
How does this play out? Well, the "mortgaged renter" does get something a conventional renter doesn't: equity. In the current housing market, that can be a considerable upside. I suspect the downside is greater. The mortgaged renter must act like a homeowner. They can't call the landlord when the dishwasher goes on the fritz. They have to pay the property tax and homeowners insurance.
Is it ethical for a mortgage lender to become a landlord without accepting the responsibilities of the landlord? I suppose the answer changes depending how the equity vs. responsibility calculation comes out.
If you've spotted other writing on this topic (which I'm sure is not a unique discovery to me) I'd love to see a link.
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