India | UK | US

Bernanke: High foreclosure rates hurt broad economy

NEW YORK (Reuters) - Federal Reserve Chairman Ben Bernanke on Monday said conditions in mortgage markets remain strained, posing a threat to the economy, and urged steps be taken to prevent home foreclosure where possible.
Posted : Tue, 06 May 2008 00:34:06 GMT
By : Reuters
Category : US (Business)
News Alerts by Email ( click here )
US Business News | Home
NEW YORK (Reuters) - Federal Reserve Chairman Ben Bernanke on Monday said conditions in mortgage markets remain strained, posing a threat to the economy, and urged steps be taken to prevent home foreclosure where possible.

"High rates of delinquency and foreclosure can have substantial spillover effects on the housing market, the financial markets, and the broader economy," Bernanke said in remarks prepared for delivery to the Columbia University School of Business in New York.

Bernanke said the sharp U.S. housing downturn is producing a steep rise in mortgage delinquencies. Not all foreclosures result in the loss of the home, he said, but the high number of borrowers in distress and sharp declines in home values in regions of the country mean the share of people who lose their homes will be higher in the current situation than in the past.

A widespread decline in home prices is a relatively novel phenomenon, and lenders and loan servicers will have to develop new and flexible strategies to deal with this issue, the Fed chairman said.

Bernanke called on Congress to move quickly on legislation expanding the Federal Housing Administration and strengthening oversight of government-sponsored mortgage finance enterprises Fannie Mae and Freddie Mac .

"Finding ways to avoid preventable foreclosures is a legitimate and important concern of public policy," he said.

Bernanke's comments come as a sharp spike in problem U.S. home loans and a deep correction in U.S. housing markets have led to financial market turmoil and weighed on U.S. economic growth to the point that many analysts believe it is in recession.

A congressional panel last week passed a sweeping bill to enable the government to finance $300 billion in distressed mortgages. Its authors say the measure would help 2 million homeowners avoid foreclosure.

The Bush administration opposes the measure, saying it exposes taxpayers to potentially significant losses if a large share of loans refinanced by the government fail.

Bernanke stopped well short of endorsing the bill in his speech, saying only that Congress should pass a legislation that would give the Federal Housing Administration greater latitude to set underwriting standards and risk-based premiums for mortgage refinancing.

(Reporting by Lucia Mutikani; Writing by Mark Felsenthal; Editing by Leslie Adler)


(c) Reuters 2008. All rights reserved. Republication or redistribution of Reuters content, including by caching, framing or similar means, is expressly prohibited without the prior written consent of Reuters. Reuters and the Reuters sphere logo are registered trademarks and trademarks of the Reuters group of companies around the world.

Share/Save/Bookmark

Article : Bernanke: High foreclosure rates hurt broad economy
Print this article
Email this article

Stay Updated
News gadget on your Google homepage
Subscribe to a news feed in Google Reader


Related News

FDIC: 'Problem' banks at 16-year high in US
Washington - The number of US banks in danger of collapse has risen to the highest level in 16 years, a government regulator reported Tuesday in a sign that the country's worst financial crisis in decades is still lingering. The Federal Deposit Insur...

American shoppers lace up racing shoes for Black Friday
Los Angeles - Up to 134 million Americans are expected to splash out with their cash when the holiday shopping season kicks off on traditional Black Friday. The National Retail Federation Tuesday said it anticipated that the easing recession will sen...

US stocks edge lower on revised growth figures
New York - US stocks fell slightly on Tuesday as government figures showed that last quarter's economic rebound was smaller than initially thought. The Commerce Department in an updated estimate said the economy grew at an annual rate of 2.8 per cent...

US economic rebound smaller than thought; Fed optimistic - Summary
Washington - The US economy's rebound from a deep recession was smaller than initially thought, according to new government figures Tuesday, while the Federal Reserve said it expects the country's recovery to pick up...

EXTRA: US central bank issues rosier outlook on economy
Washington - The Federal Reserve Tuesday raised its growth forecasts for the US economy, but warned that unemployment in the United States will remain for some time at its highest levels in a generation. The US central bank projected the world's larg...

US levies first-ever fines on airlines who stranded passengers
Washington - Three US airlines were fined a total of 175,000 dollars on Tuesday for leaving passengers stranded nearly six hours on an aircraft, the first-ever such penalty imposed by the US government. Continental Airlines and ExpressJet Airlines we...

US economy grew 2.8 per cent in third quarter - Summary
Washington - The US economy grew at an annual rate of 2.8 per cent in the third quarter of this year, according to an updated government estimate Tuesday that confirmed the United States has likely emerged from its deepest recession in decades. But t...

Have your Say
Name
Email
Subject
Your Comment

Enter Verification code
 
  

 

 

More US (Business) News click here
Follow The Earth Times
Subscribe to RSS Follow Earth Times on TwitterNews by email
Share/Save/Bookmark

 
 



 
Subscribe to free Earthtimes
News Alerts by Email Click here
For RSS Feeds Click here
or Create your own RSS

Add to Google Toolbar
Breaking News
Press Releases

 


The Earth Times
News Category

© 2009 www.earthtimes.org, The Earth Times, All Rights Reserved | Privacy Policy
Earth Times accept no responsibility or liability either directly or indirectly for views or opinions expressed in articles or comments.