The government, as owner of mortgages and mortgage backed securities, will be allowed to make loan modifications by lowering principal and interest rates on mortgages, or extending the life of the mortgage.

FORBES: A Deal On The Bailout

The government, as owner of mortgages and mortgage-backed securities, will be allowed to make loan modifications by lowering principal and interest rates on mortgages, or extending the life of the mortgage.

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Reverse mortgage consumers struggle to understand how interest gets compounded on a loan that does not involve monthly payments on interest and principal.

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Therefore, the cash flows of auto loan ABS include monthly interest, principal payment and prepayment.

FORBES: Examples of ABS

In government borrowing, the nation, its taxpayers, must pay interest on the principal borrowed whilst the government delays taxing the principal and repaying the loan.

FORBES: We'd All Better Hope Krugman Is Right On The U.S. Debt

His or her loan will be modified (interest rate reduced or principal forgiven) and because of new more lenient HAMP rules, when she or he defaults again, the loan can be rejiggered yet one more time.

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Regarding such a switcheroo as "income" is like making an interest-free loan and then telling yourself, as the debtor pays back only your principal, that you are earning a generous return on your money.

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