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Bernanke Calls for Action on Foreclosures

Federal Reserve Chairman Ben Bernanke recommends additional government action to help distressed homeowners avoid foreclosure and stay in their homes. Speaking at a Fed housing conference in Washington yesterday, Bernanke said the housing crisis has “played a central role” in the nation’s broader economic problems.

Perhaps as many as 15 to 20 percent of mortgage holders may be under water on their mortgages, Bernanke said, but he stressed that the goal of foreclosure relief measures goes beyond a desire to help homeowners who are in trouble. “Steps that stabilize the housing market will help stabilize the economy as well. Reducing the number of preventable foreclosures would not only help families stay in their homes, it would confer much wider benefits,” he said. Bernanke’s proposals include government-engineered loan modifications and additional taxpayer money to help people refinance their loans.

The Fed chief’s comments come amid reports that the Treasury Department is considering a plan to lower mortgage interest rates to 4.5 percent. Such rates would be available only to people who were buying a home, not existing homeowners looking to refinance.

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