Bernanke Speaks out on Foreclosure’s Effect on Economy

Federal Reserve Chairman Ben Bernanke announced Monday that the mortgage market throughout the country remains strained due to defaults, and urged that something, anything must be done to halt foreclosure, as it is crippling the nation’s economy as a whole.

Speaking to the New York University School of Business, he remarked about how mortgage defaults and delinquencies can have a drastic slowing effect on the mortgage market, which in turn affects larger financial markets, and contributes to slowdowns in the economy, such as the debated recession some believe we are currently experiencing.

The housing market downturn has resulted in even more foreclosures, somewhat ironically, and also the steep fall in property values we are seeing nationwide. Dealing with the decline in property value creates a fresh challenge, Bernanke believes, as such a widespread drop in value hasn’t really been seen to such a degree before.

Bernanke seemed to be plugging the upcoming Foreclosure Rescue Bill, but also was careful to mention that the buy-up of foreclosures and foreclosure houses was also key to the market’s ability to rebound, as foreclosures sitting on the market drag down regional property values.

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• Should You Wait or Buy Now?
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