Bernanke: Homeowners Need More Help

Fed chief calls for writing down problem mortgages' principal
By Sam Gale Rosen,  Newser Staff
Posted Mar 4, 2008 9:29 AM CST
Federal Reserve Chairman Ben Bernanke testifies on Capitol Hill in Washington, Wednesday, Feb. 27, 2008, before the House Financial Services Committee hearing on the latest measures to heal the U.S. economy....   (Associated Press)
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(Newser) – Ben Bernanke says homeowners need more help, and that help might include writing down the principal on some problem loans, reports the Wall Street Journal "Efforts by both government and private-sector entities to reduce unnecessary foreclosures are helping, but more can, and should, be done,"  the Fed chairman said today in a speech to a community banking conference in Florida.

Efforts to stem foreclosures have focused on curbing interest rates, but Bernanke said writing down the principal might be called for in cases where the value of the home is now lower than the value of the mortgage. "In this environment, principal reductions that restore some equity for the homeowner may be a relatively more effective means of avoiding delinquency and foreclosure," he said.