The Interviews - Experts Address Recent Fraud Headlines. This collection of interviews offers analysis of recent financial fraud events and cases.
Posted on 20th Nov 2012 @ 12:50 PM
Although the housing sector is improving for the first time in a number of years, the housing revival still faces significant obstacles, Federal Reserve Board Chairman Bernanke acknowledged during a November 15 speech at the Operation HOPE Global Financial Dignity Summit in Atlanta.
“To be sure, the housing sector is far from being out of the woods,” Bernanke said. “Construction activity, sales, and prices remain much lower than they were before the crisis. About 20 percent of mortgage borrowers remain underwater--that is, they owe more than their homes are worth. Despite marked improvements in overall credit quality, 7 percent of mortgages are either more than 90 days overdue or in the process of foreclosure. And, although the number of homes in foreclosure has edged down since cresting in 2010, that number remains in excess of 2 million, three times the historical norm.”
He added, “Meanwhile, the national homeownership rate has slipped nearly 4 percentage points from its 2004 high of 69 percent, and it now stands at a 15-year low.”
Bernanke also noted that “lower-income and minority communities are often disproportionately affected by problems in the national economy, and the effects of the housing bust have followed that unfortunate pattern.” He added, “Indeed, as a result of the crisis, most or all of the hard-won gains in homeownership made by low-income and minority communities in the past 15 years or so have been reversed.”
Tight credit remains an important problem, according to Bernanke.
“Certainly, some tightening of credit standards was an appropriate response to the lax lending conditions that prevailed in the years leading up to the peak in house prices,” he asserted. “Mortgage loans that were poorly underwritten or inappropriate for the borrower's circumstances ultimately had devastating consequences for many families and communities, as well as for the financial institutions themselves and the broader economy.”
But Bernanke believes that it “seems likely at this point that the pendulum has swung too far the other way, and that overly tight lending standards may now be preventing creditworthy borrowers from buying homes, thereby slowing the revival in housing and impeding the economic recovery.”
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