What's the gimmick? (unsolicited mortgage offers)

Factual Questions
1

We get lots of 'em. Usually labelled with something like “IMPORTANT INFORMATION ABOUT YOUR MORTGAGE”. At first we tended to think “oh no!” and look at them, only to realize they were from some presumably fly-by-night company, encouraging us to dump our high-payment mortgage with xxx (our mortgage company). So we toss them unless they’re clearly from our mortgage company.

One caught my eye recently and for reasons unknown, I opened it. It was an oh-so-attractive offer for a mortgage in the amount of (our refinance amt from 3 years ago), at a slightly higher rate of interest, with a payment that’s half our current payment amount. Hell, it’s half the interest portion of our current payment amount.

What’s their angle? How could they say the payment would be that much lower than the interest alone on the current mortgage? Is this some weird teaser-rate/negative amortization thing? No, we’ve never even been tempted to pursue such a thing - as the owners of a 5.75% fixed-rate mortgage, we’d be nuts to do so. I’m just curious as to how they could rationalize that load of hooey and how they get suckers to bite.

And how do scammers like this get our info anyway? Is it on the public records? Can anyone with no need-to-know really get that sort of data? or did the settlement company sell it to them?

Funny but slightly related: For about 2 years after we moved, we’d get frequent letters offering to buy our house. Our old house. The one we no longer owned. Addressed to us at our new house. Clearly someone’s data-mining software wasn’t working too well!

2

If you read the fine print, it’s probably an “interest only” loan. The payment is lower, but it all goes to interest and you’re not paying down the principal at all. After X years, it reverts to a regular amortized loan and you start paying principal (with higher payments).

There are some scenarios where this may be a good deal, but probably not in most cases.

3

Right - that’s was initial assumption. HOWEVER - the monthly payment listed is considerably less than the interest portion of our current loan - than the initial amount from 3 years ago, that is. With a similar (slightly higher) rate, the “interest only” portion should be comparable to our original interest amount, not half of it. That’s why I think they’re trying to pull something over on their vict-, er, potential clients, with negative amortization.