Lower Mortgage Payments Cut Default Risk

Based on recent reports, it has been revealed that cutting borrowers’ payments in half significantly reduces the risk of default on a mortgage. This news stems from research done by the Federal Reserve Bank of New York on Alt-A adjustable rate mortgages over a three-year period. Many rate-cutting plans and loan modifications have been put into place in order for the payment reductions to occur. The lower rates (and thus payments) give the damaged housing market a much needed boost. If rates rise again as they have in the past, the benefits of these plans will be erased and borrowers may find themselves in the same position. Read the full article here:  http://blogs.wsj.com/economics/2012/11/16/lower-mortgage-payments-cut-default-risk/