Federal Reserve Board Chairman Alan Greenspan says he believes homeowners are financially well positioned to deal with falling housing prices when the housing market cools."Should home prices fall, we would have reason to be concerned about mortgage debt; but measures of household financial stress do not, at least to date, appear overly worrisome," Mr. Greenspan told the America's Community Bankers annual convention in Washington. The refinancing boom that ended in the fall of 2003 has improved the financial condition of the average homeowner, he pointed out. In addition, most borrowers have fixed-rate mortgages, which should moderate the impact of rising interest rates on debt-service payments. "Many of those who purchased their residence more than a year ago have equity buffers in their homes to withstand any price decline other than a very deep one," he said.

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