Foreclosure News Update

Federal Reserve Chairman Ben Bernanke showed his support for congressional legislation aimed at quelling the housing crisis in a speech delivered to the Columbia School of Business on May 5th. Barney Frank, D-Mass Chairman of the House Financial Services Committee, has pushed the bill which would guarantee as much as $300 billion in refinanced loans for homeowners that are facing foreclosure, via the Federal Housing Administration.

Bernanke's support may give the measure more political momentum in congress. Bernanke stressed in his speech that the borrower and the lender in a foreclosure are not the only beneficiaries of the negative financial impact, and that multiple foreclosures can cause more widespread consequences to a surrounding community. According to Bernanke, the reduction of property values, a decrease in collected tax revenues, and the deflation of the median house prices are all propagated by widespread foreclosure activity.

In his speech, Bernanke also favored proposed legislation supported by the White House, calling for reform of the Federal Housing Administration, allowing it to increase the it's range of lending & for increased oversight of the two GSE's, Fannie Mae & Freddie Mac. Bernanke believes both Fannie Mae & Freddie Mac could increase their efforts by raising capital to provide more assistance to the housing markets.