Bernanke Wants Banks to Rework Mortgages

Washington Post (03/05/08) P. D1; Irwin, Neil
Mortgage foreclosures are likely to continue for some time, Federal Reserve Chairman Ben Bernanke said on March 4. During a convention of community bankers in Orlando, the economist called on mortgage lenders to reduce the principal owed on certain loans; but he did not say that mortgage originators should be forced to delay foreclosures or that the government should buy problem loans. "Efforts by both government and nonprofit entities to reduce unnecessary foreclosures are helping, but more can and should be done," Bernanke said. He noted that mortgage lenders have been willing to allow subprime borrowers with adjustable-rate mortgages to keep their interest at low starter rates but not to renegotiate the value of the loans; additionally, he said that about 1.5 million of these loans are scheduled to reset to higher rates in 2008.