Making Mortgages More Manageable - The Flexible Payment Mortgage

The standard mortgage in the US has two major weaknesses. Because of the rigid payment obligation, it is very difficult to manage the repayment process efficiently. And because the loan balance that the borrower pledges to repay is not affected by any changes that occur in the economy, the borrower is forced to assume a risk that her equity in the property will decline. The first problem is discussed below, the second one is considered next week.

One of the things I have learned from many years of answering questions from consumers is that often they try to manage their mortgage in one way or another, often without success. The existing instrument was not designed to be managed. An instrument that could be effectively managed would result in more rapid pay-down of loan balances and fewer defaults.

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