December 5, 2008 Bernanke Calls for More Help for Homeowners By JACK HEALY
The Federal Reserve Board chairman said Thursday that the government and banks must do more to curb a flood of foreclosures that has devastated families and neighborhoods and now threatens to deepen the housing crisis.
The Fed chief, Ben S. Bernanke, said the government had made serious attempts to address the housing crisis and ease the rates of foreclosures. But Mr. Bernanke said some of those programs had so far been sparsely used, and might need bolstering.
"Despite good-faith efforts by both the private and public sectors, the foreclosure rate remains too high, with adverse consequences for both those directly involved and for the broader economy," Mr. Bernanke said in a speech in Washington. "More needs to be done."
He sketched out a range of options, including buying delinquent mortgages in bulk and refinancing them into government-backed programs, writing down the value of a loan's principal amount in "cases of badly underwater mortgages," to reflect the decay in real estate values, and bolstering a program run by the Federal Deposit Insurance Corporation that seeks to lower homeowners' monthly payments on delinquent mortgages.
[...]
He called for measures that would modify home loans, allowing homeowners who are struggling to pay off mortgages to stay in their houses.
"Under the current circumstances, with house prices declining and credit tight, permanent loan modifications will often be needed to create sustainable mortgages and keep people in their homes," Mr. Bernanke said.
[...]