Greenspan Backtracks on FRMs

Federal Reserve Board chairman Alan Greenspan has had second thoughts after telling a credit union audience recently that the 30-year fixed-rate mortgage is an expensive way to finance a home.Speaking to the Economic Club of New York on March 2, the Fed chairman said he did not mean to "disparage" the traditional fixed-rate mortgage. The 30-year, self-amortizing mortgage is one of the "great inventions" in the marketplace, Mr. Greenspan said. The Fed chairman told the credit union audience that homeowners would have saved tens of thousands of dollars had they held adjustable-rate mortgages over the past 10 years. But Mr. Greenspan said he had spoken "imprecisely" and that his remarks were focused on a narrow segment of the market that is not well served by the traditional 30-year mortgage or currently available ARM products.