WASHINGTON — The Federal Reserve, in a move that could help break the logjam at the center of the credit crisis, has adopted a new strategy to permit some troubled borrowers to reduce the amount they owe and refinance into more manageable mortgages.
It is likely to set the stage for a broader Obama administration attack on the foreclosure crisis.
The policy of reducing the principal balance of the loan, adopted without fanfare by Fed governors last week and disclosed to key lawmakers Tuesday, came as the central bank said Wednesday it would continue to hold its benchmark interest rate around 0 percent and pursue more innovative ways to repair the nation’s broken credit markets.
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