U.S. News: Housing Initiatives Promoted
A top official at the Federal Reserve called for more aggressive action to help the housing market by allowing more homeowners to refinance and by converting some foreclosures into rental housing.</br></br>Home sales have been disappointing this year, with tight credit and weak demand making it harder for markets to absorb a steady stream of foreclosed properties.</br></br>"Clearly the market is not functioning as it should," said Federal Reserve Governor Elizabeth Duke in a speech Thursday in Washington.</br></br>Though mortgage rates are hovering near the lowest levels in decades and the Fed pledged last month to keep interest rates close to zero for another two years, many Americans haven't been able to refinance their home loans because they don't have enough equity or they can't qualify under rigid standards.</br></br>Ms. Duke said that policy makers should consider enhancing an existing White House program designed to facilitate more refinancing of loans guaranteed by government-supported mortgage firms Fannie Mae and Freddie Mac. Allowing more homeowners to take advantage of low interest rates to reduce their monthly payments could both lower the risk of future defaults and boost the weak U.S. economic recovery.