Negative amortization wasn't part of Linda Martin's vocabulary when she refinanced the loans on her Lakewood home and rental houses in Arvada and Castle Rock.

Now, Martin could write a book about how, after years of making your mortgage payment, the amount you owe actually gets larger, not smaller.

Martin's story is a textbook case of what not to do when getting a home loan. She testified this week in favor of Denver Democratic Sen. Peter Groff's bill to license mortgage brokers.

She was talked into refinancing her Lakewood home in 2004 by what she called a slick, smooth-talking mortgage broker salesman. Her initial rate of 2 percent evaporated quickly.

The rates on her loans now range from 7.625 percent to 8.125 percent, far higher than the market rate of around 6 percent.

Last year, she paid about $33,000 in interest on her properties, just about equal to her gross income.

To add insult to injury, the amounts due on her mortgages have risen by about $7,000 on one loan and $12,000 on the other two, thanks to negative amortization.

Negative amortization occurs when the monthly mortgage payment isn't enough to cover the amount of interest due for that month. The loan balance then increases by the amount of unpaid interest.

Martin said she was never told about negative amortization when she refinanced.

"It was a true bait and switch," Martin said. "I'm a single mom who raised three kids and scrimped and saved to buy these homes. They were going to be my retirement. Now, I could lose everything."

Linda Martin

• Single mother

Residence: Lakewood

Problem: Her adjustable-rate mortgages have negative amortization.