February 10, 2012 - Restraints on credit for home buyers and home builders alike continue to impede the housing and economic recovery, Federal Reserve Chairman Ben Bernanke said today in an address to the National Association of Home Builders (NAHB) Board of Directors in Orlando. The Fed chairman said that his message to regulators is for them to take a balanced approach and to approve loans for those who meet sound underwriting standards.
Bernanke also added that the Fannie Mae and Freddie Mac limits on investor loans are counterproductive in the current economic climate and that policy should be to encourage more loans to help ease the inventory of distressed properties.
"Banks remain reluctant to make loans, both to mortgage borrowers and home builders," said Bernanke, who noted that current credit conditions are too tight for the financial system, for the construction industry and the economy. "Do not turn away creditworthy borrowers, and that includes home builders."
He also added that the Fannie Mae and Freddie Mac limits on investor loans are counterproductive in the current economic climate and that policy should be to encourage more loans to help ease the inventory of distressed properties.
Bernanke’s remarks on the need to take more aggressive action to support a housing recovery confirms what the nation’s home builders have been saying for some time and reiterates similar themes in a Jan. 4 white paper provided to Congress, in which the Federal Reserve noted that “restoring the health of the housing market is a necessary part of a broader strategy for economic recovery.”
Fixing the nation’s housing woes is taking on a sense of increasing urgency in Washington. In unveiling a new plan last week, President Obama cited the important role that housing plays in the economy.
The President reiterated the high value that Americans place on homeownership and the need to help home owners while commenting on the mortgage settlement agreement reached between the states and five major banks.
“We can’t wait to get things done and to provide relief to America’s home owners,” Obama said. “We need to keep doing everything we can to help home owners and our economy.”