Fed Chair Bernanke Vows to Help Homeowners

As being reported by the Associated Press - Federal Reserve Chairman Ben Bernanke has promised to help struggling homeowners all he can amidst a wave of foreclosures.

Bernanke, in a speech ready for the National Community Reinvestment Coalition’s annual meeting, says the central bank is strongly committed to fully using its authority, expertise and other resources to help alleviate personal distress.

Record-high foreclosures are aggravating problems in the housing market and for the national economy.

Bernanke didn’t offer new recommendations — as he did earlier this month — but rather spoke of the various steps the Fed already is taking to address current problems and to prevent another crisis of this sort.

The Fed, for instance, has proposed a rule to protect homebuyers from some of the same dubious lending practices that contributed to the housing and credit debacles now shaking the country. Subprime borrowers — those with tarnished credit histories or low incomes — have been hurt the most, although problems have spread to more creditworthy borrowers.

In a speech earlier this month, Bernanke urged lenders to help distressed homeowners by lowering the amount of their loans. At the time, Bernanke suggested such a longer-term permanent solution may work better than shorter-term and temporary ones, where the distressed homeowner could find himself in trouble again.

To date, permanent home mortgage modifications that have occurred have typically involved a reduction in the interest rate, while reductions of the principal balance of the loan have been quite rare, he said.