(Reuters)
The fact that many troubled borrowers have properties that are now worth less than the principal amounts ... suggests that lenders and servicers should give greater consideration to the use of principal reduction as one of the loan modification options in their tool kit," Kroszner told the U.S. House of Representatives Financial Services Committee.
He said home foreclosures in 2008 will top the 1.5 million of 2007 and noted that in January some 24 percent of subprime adjustable rate mortgages were behind on payments, double the fraction that were delinquent a year earlier.
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