The Ultimate Pick-A-Pay Loan? - Skip to content

The Ultimate Pick-A-Pay Loan?


Distressed homeowners may have overlooked the ultimate pick-a-pay loan.

Older homeowners who find themselves in financial distress are likely overlooking the ultimate pick-a-pay loan that’s hiding in plain sight. Pick-a-pay mortgages or option ARM loans were the rage in the years leading up to the housing crash and economic crisis of 2008. These adjustable-rate mortgages offered homeowners the option to make a minimum payment that didn’t even cover that month’s accumulated interest, an interest-only payment, or a fully-amortized payment that covered both interest and principal. The trick was making only the minimum payment would only last 12 to 60 months at which time the borrower experiences payment shock with payments that may be 63% higher than what a regular mortgage payment would have been.

Another trigger was if the negative amortization or growing loan balance reached 110 or 125 percent of the loan’s starting balance larger payments would be required. Today the seven most-popular mortgages are fixed-rate or conventional loans, adjustable-rate mortgages, interest-only mortgages, jumbo loans, FHA mortgages, VA loans, and USDA.

The good news is the majority of mortgages held in the U.S. are fixed-rate loans. This substantially reduces the likelihood of a wave of defaults and foreclosures. However, the bad news is many older homeowners have been pushed into a twisted version of a pick-a-pay. They must pick which bills to pay in order to keep their mortgage current or risk potential foreclosure.

If there’s one thing consumers like it’s choice. And that’s exactly what a…

Read More


Editor in Chief:
As a prominent commentator and Editor in Chief at, Shannon Hicks has played a pivotal role in reshaping the conversation around reverse mortgages. His unique perspectives and deep understanding of the industry have not only educated countless readers but has also contributed to introducing practical strategies utilizing housing wealth with a reverse mortgage.
Shannon’s journey into the world of reverse mortgages began in 2002 as an originator and his prior work in the financial services industry. Shannon has been covering reverse mortgage news stories since 2008 when he launched the podcast HECMWorld Weekly. Later, in 2010 he began producing the weekly video series The Industry Leader Update and Friday’s Food for Thought.
Readers wishing to submit stories or interview requests can reach our team at:

Leave a Comment


  1. Great message.. Another point of view for presentations.. I love it!!
    John Link
    Legacy Lending
    Yuba City CA

Add a Comment

Your email address will not be published. Required fields are marked *


Recent Stories


Subscribe to join our World

Get the latest reverse mortgage news delivered straight to your inbox.