
The Debate Over Mortgage Principal Reduction
Mortgage principal reduction is an idea that could be helpful to or cause more default among borrowers. Some experts feel that widespread mortgage principal reduction may drive defaults much higher. Also, taking this step may tighten lending by forcing banks to offer “price protection” to borrowers. Moreover, the data shows there is essentially no difference in re-default rates among delinquent borrowers, given only payment reductions. And, those also offered smaller