Federal Reserve Bank of Chicago president Charles Evans suggested Tuesday that the U.S. economy and the housing market have “a good ways” to go to recover from the financial crisis.

Evans, who will be a voting member of the Fed’s policymaking Federal Open Market Committee next year, said job losses are driving mortgage defaults and foreclosures. Despite government efforts to modify mortgage loans and limit foreclosures, millions of Americans are still losing their homes. He spoke at a meeting of the Indianapolis Neighborhood Housing Partnership.

“Although there are some encouraging signs of general economic recovery and some evidence of home-price stabilization, we are certainly not out of the woods,” Evans said. “Projections suggest foreclosed housing units could reach as high as three million in 2010 with over a million lender repossessions.”

Evans said mortgage distress is not limited to subprime borrowers.

“In the state of Indiana, the inventory of subprime foreclosures actually decreased by about 4% from 2008 to 2009, while the inventory of prime foreclosures rose by over 36%,” he said.

— Market News International

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