In a kind of vicious circle, Federal Reserve governor Randall Kroszner said yesterday that a softening economy and declining employment are contributing to mounting mortgage delinquencies and foreclosures.

The resulting home vacancies are having “negative effects” on American communities, Kroszner said, adding that the Fed considers the high rate of foreclosures “an urgent problem.”

Dealing with foreclosures is “essential to promoting local and regional economic recovery and growth,” he said, adding: “The mortgage market continues to face challenges, especially in the subprime segment.”

— Market News International

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