Bernanke Backs Democratic Bill On Refinancing Troubled Mortgages

New York, NY (AHN) - Federal Reserve Chairman Ben S. Bernanke urged the government and mortgage lenders Monday to take more steps to prevent home foreclosures and reiterated his proposed solutions to the housing crisis.

In a dinner speech at the Columbia Business School in New York, Bernanke declared support for a Democratic bill in Congress providing for refinancing of troubled mortgages by the Federal Housing Administration.

The Fed chief also repeated his calls for lenders to forgive part of mortgages of struggling homeowners and for government-chartered Fannie Mae and Freddie Mac to have a stronger role in easing the housing slump and raise new capital.

According to Bloomberg.com, Bernanke said that temporary repayment plans or folding missed payments into the principal balance are no longer effective in helping struggling homeowners. Bloomberg.com quoted him as saying, "The best solution may be a writedown of principal or other permanent modification of the loan.''

Bernanke warned, "High rates of delinquency and foreclosure can have substantial spillover effects on the housing market, the financial markets and the broader economy," according to Foxnews.com. "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."