Posted by Randall Porter on June 26, 2001 at 10:13:35:
This sounds like a loan that was either orginated or insured by the Farmers Home Administration(FmHA), now know as Rural Development. The monthly payment is based on the borrowers income, and the difference between the fully amortized payment and the actual payment made by the borrower is added to the back end of the loan. In other words, this is a loan that has negative amortization. If this loan is a Rural Development loan, there is really nothing you can do to make this deal work, other than going to the Sheriff Sale and bidding on it then. Here in Ohio, Rural Development does not even bid on these houses at the Sheriff Sale. Whoever is the high bidder at the sale ends up with the house.