And by doing that, they would make
small incremental
adjustments to the effective Fed funds rate or the Fed funds target rate at that point in time and actually, because it wasn't posted on Bloomberg or wasn't said at that point in time, in the late 70s, early 80s you wouldn't actually know that the Fed was actually targeting or adjusting interest rates
until you actually saw those processes or felt them in the marketplace occurring in the short - term markets.
The interest that you aren't paying because of the lower monthly payment is being tacked on to your mortgage balance
until the next interest rate
adjustment when your loan will reamortize based on a larger balance, not a
smaller balance as should usually happen, hence the term «negative» amortization.