Real mortgage market relief will come only from a recovery of the nation’s housing sector, Federal Reserve Board chairman Ben S. Bernanke said yesterday.

“Reducing the rate of preventable foreclosures would promote economic stability for households, neighborhoods, and the nation as a whole,”  told the Independent Community Bankers of America Annual Convention, according to prepared text released by the Fed. He noted lenders and servicers have “adopted a wider variety of loss-mitigation techniques, [but] more can, and should, be done.”

“Greater use of principal write-downs or short payoffs, perhaps with shared appreciation features, would be in the best interest of both borrowers and lenders,” Bernanke said, adding that the Federal Housing Administration should have “the flexibility to offer refinancing products to more borrowers.”

“Ultimately, though, real relief for the mortgage market requires stabilization, and then recovery, in the nation’s housing sector. Modernization of the FHA would be of help on this front as well,” he said.

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