Fed Economists Suggest Rapid Mortgage Paydown Plan

Alternatives to the current long-term process of paying down a mortgage include one proposed by a pair of economists at the Federal Reserve Board.

Fed economists Wayne Passmore and Alexander H. von Haften discussed their alternative approach in a working paper titled Financing Affordable and Sustainable Homeownership With Fixed-COFI Mortgages.

Their central idea for encouraging more rapid equity growth is to trade off the borrower’s right to refinance when interest rates fall, which imposes a heavy cost on lenders, for larger principal payments.


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From:: Financing