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Bernanke Urges Action to Avert Further Foreclosures

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Bernanke Urges Action to Avert Further Foreclosures

Federal Reserve Chairman Ben S. Bernanke, seeking to end the worst housing slump in 25 years, urged the government and mortgage lenders to intensify their efforts to avoid home foreclosures.           

Bernanke, in a speech in New York today, also reiterated his call for lenders to forgive portions of mortgages for some struggling homeowners. He said proposals should be ``tightly targeted'' at borrowers at greatest risk of losing their properties, and avoid providing an incentive for defaults.    

The Fed chief also backed the idea of having the Federal Housing Administration refinance troubled mortgages, a concept included in Democratic legislation in Congress, without explicitly endorsing the bill. His remarks indicate a gap with the Bush administration, which has preferred to rely on industry- led efforts.    

"Realistic public- and private-sector policies must take into account the fact that traditional foreclosure-avoidance strategies may not always work well in the current environment,'' Bernanke said in remarks to a Columbia Business School dinner.    

Source:
Bernanke Urges Action to Avert Further Foreclosures
Scott Lanman and Alison Vekshin
Bloomberg, May 5  2008
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=a8EpYTgVyvcQ

Thursday, May 08, 2008 | 03:30 AM | Permalink | Comments (8) | TrackBack (0)
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Comments

Whoooa!

http://news.yahoo.com/s/nm/20080507/us_nm/usa_fed_kroszner_dc

As house prices fall, people will invest in REO's anyway. But, here's a way for the Fed to help banks find "volunteers" to bottom-fish early and at higher prices.

Will the Fed governors will make appearances on Flip That House??

Posted by: wunsacon | May 8, 2008 3:53:33 AM

This rather transparent effort to 'prop up' CDO's in the Fed's possession will end in disaster for the US taxpayer.

Some estimates place the number of eligible participants for this program at 500,000, a fraction of the number of foreclosures currently in process...not to mention the the huge number of mortgagee's facing resets this year and next...

Add to this rapid (speculator driven) inflation in fuel and food prices and you have the ingredients for a full scale revolt on your hands!

There is no way out...

Posted by: Gegner | May 8, 2008 5:22:45 AM

Is it just me, or does bloomberg feed only work in IE. My firefox browser always asks for WMP - which I have, but only runs video in IE.
I think Bernanke looks like a large teddy bear.

Posted by: cielo | May 8, 2008 7:13:55 AM

AS usual, even if this had a chance of being any good,..it would never get to the people who needed it. Greedy investors would figure out how to fleece America some more.

Ben misses the fact that homes became an investment pyramid scheme. It was a HUGE part of GDP that will never be replaced in the near term. No ATM, falling wages, energy/food inflation, and municipal tax base disapearing. That proposal will be felt like a fart in a hurricane.

Are we sure Al and Ben are not in Al Qaeda?

Posted by: Ken H. | May 8, 2008 7:30:04 AM

Here is Bernanke's full speech.

http://www.federalreserve.gov/newsevents/speech/Bernanke20080505a.htm

His conclusion:
"Most Americans are paying their mortgages on time and are not at risk of foreclosure. But high rates of delinquency and foreclosure can have substantial spillover effects on the housing market, the financial markets, and the broader economy. Therefore, doing what we can to avoid preventable foreclosures is not just in the interest of lenders and borrowers. It's in everybody's interest."

Everybody's interest? Except those who chose to rent.

Posted by: MJ | May 8, 2008 10:36:37 AM

Ben is a tool. He watched naively as property prices bubbled up through insanely loose lending standards, as these ticking-time bomb mortgages became embedded in the assets of financial institutions, as hundreds of billions of capital was borrowed and consumed.

And now he wants to protect the system?

Where do we even start with this guy?

Posted by: Mr. Beach | May 8, 2008 10:45:19 AM

It seems to me that the grease we need to get the housing market settled faster would flow from a change wherein banks paid the same costs to buyback their auctioned homes as any other buyers. Does that exist anywhere and if so, what is the effect?

Posted by: Kinchip | May 8, 2008 11:07:28 AM

I think Ben is becoming unnerved a little bit. Maybe he knows that the next wave of foreclosures is twice as big as the first. And, if its allowed to occur without being "cushioned" or delayed, the impact huge.

Posted by: Johnnyvee | May 8, 2008 11:08:32 AM