While we celebrate the decline of prices in homes here in Bakersfield, what about the people who bought at the peak, and in order to qualify, took pay option, neg am loans. Were they counseled to be savvy on how to make the payments or not? Anyone out there struggling yet? I found this article interesting:

CEO Makes Call on Pay-Option Loans: It's Risky
Los Angeles Times (09/14/06)
Countrywide Financial Corp. CEO Angelo Mozilo said he conducted a "little experiment" in an effort to comprehend why borrowers of "pay-option" mortgages choose to make remit the minimum amount, when doing so increases--rather than decreases--the loan balance. What the executive found after personally calling some customers, he said, was that borrowers were "doing it because the rate of negative amortization is less than the increased value" in their property each month. Customers expressed certainty to Mozilo that their homes would continue to appreciate in value, thereby compensating for the added costs of negative amortization. "The average age of our borrower is about 38 years old. They have never in their adult lives seen values going down," explained Mozilo. "The concept is alien to them."

Or do you have a HELOC / line of credit second? Are you making the minimum payment of interest only or are paying more than the minimum required so it applies to principal? Are you glad you took a HELOC vs a regular fixed rate second?