Why Aren't Foreslosure Rescue Policies Working
Wall Street Journal
By Nick Timiraos
...Prime borrowers are beginning to default at a faster pace than subprime borrowers-a sign that rising unemployment and not unaffordable mortgage payments on exotic loans may have more to do with defaults. Indeed, jobs and home prices may help determine the ultimate success rate of these programs, as Tracey Seslen, a clinical finance professor at USC's Marshall School of Business, notes on this blog run by the university's Lusk Center for Real Estate.
As for federal efforts, Ms. Seslen argues that reducing borrowers' loan principal, rather than lowering the borrowers' interest rate to achieve a lower monthly loan payment, ought to be "among the first remedies considered."