Lat week I had little good to say about Fannie Mae's new Payment Power Program (PPP), which allows a borrower to skip up to two mortgage payments in any 12-month period, and up to 10 over the life of a loan. A skipped payment results in an additional loan, equal to the payment plus a healthy access fee, tacked on to the balance. As an emergency source of funds, it is much more costly than accessing a home-equity line of credit (HELOC). My view is that borrowers don't need a high-cost way to borrow for emergencies. What they need is a no-cost way to accumulate a reserve within their existing mortgage that would allow them to skip or reduce payments when necessary. A truly flexible mortgage would provide this. Here is how it would work. The flexible mortgage would base the borrower's payment obligation on the loan balance. A schedule of required balances, declining month by month over the life of the loan, would be part of the contract. If the borrower made all the scheduled payments, h...
by Brad Inman | on Mar 21, 2017
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