Mortgage firms reduce principal to battle foreclosures

11/20/2008 | Wall Street Journal, The

In a small but growing movement, some mortgage companies are lowering the principal on home loans, determining that the move may pay off in the long run if it helps struggling homeowners avoid foreclosure. Most loan-modification plans center around lower interest rates or giving borrowers more time to pay off the loan, but for some, those measures are not enough. However, not all firms agree that lowering the balance of the loan is the way forward.

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