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And it provides financial incentives to lenders to rework those loans so that they're more affordable, generally by reducing the interest rate.
One reason is that its usual method of modifying loans — lowering the monthly payment by reducing the interest rate — does not work well for jobless and underwater borrowers.
The goal of the agency's approach is to cut a person's monthly payment to 31percentt of gross monthly income by reducing the interest rate or increasing the loan's length; some officials favor reducing the outstanding principle.
"What monetary policy can do," Mr. Orr said, "is cushion the downturn by reducing the interest cost of short-term floating rate debt, helping profit margins for companies and monthly payments for consumers".
The only way to reduce the payment on a 15-year mortgage without reducing the loan amount is by reducing the interest rate.
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Central banks stimulate spending by reducing the real interest rate, which is the nominal interest rate minus the rate of inflation.
The revised forecast follows a week of signs of increasing weakness, including an effort by the nation's central bank to encourage business by reducing the benchmark interest rate by 0.5percentto to 4percentt, a record low.
The European Union has an interest in keeping the Greeks on that path and easing the pain by stretching out maturities and further reducing the interest rate on official loans.
Travelodge has traded well since the financial crisis, but the deal will put its future on a stable footing by strengthening its balance sheet and reducing the interest rate on its debt.
One interesting proposal is to reduce the tax incentive for companies to borrow money by reducing the deduction for interest payments.
The general thought behind QuickPay was that it would reduce costs to small businesses to the tune of 'billions' by reducing the amount of interest they paid out on loans taken to finance growth or continued manufacturing.
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Justyna Jupowicz-Kozak
CEO of Professional Science Editing for Scientists @ prosciediting.com