How would a truly flexible mortgage work?

Reducing, skipping monthly payments comes into fruition

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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...