Realtor questions value of interest-only real estate loans

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DEAR BOB: I am a retired Realtor who began his real estate career in 1946. I have enjoyed your columns since they started in the paper many years ago. You write about current, practical topics I enjoy reading about. Recently, you wrote about "interest-only mortgages." Back when I started selling homes, interest-only mortgages were strongly blamed for the many realty foreclosures during the Great Depression. The problem then was the value of the security often fell below the mortgage balance. That's why the FHA was created to provide monthly amortized mortgages to slowly reduce mortgage balances. Do you think American borrowers (and lenders) are setting themselves up for a financial foreclosure debacle? -- Guy C. DEAR GUY: No. Most of today's "interest-only" home mortgages, often called "option mortgages," give borrowers the choice of paying (1) interest-only, (2) fully amortized, (3) partially amortized, and even (4) negative amortization (less than interest-only, with the unpaid inte...