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Morning Mortgage Meltdown: Bernanke Wants More, Now!!!

Looking suspiciously pleased with himself while delivering the somber news to a group of community bankers yesterday (see right), Fed Chairman Ben Bernanke predicted a rise in mortgage delinquencies and foreclosures as the imbalance between supply and demand continues to eat into home prices and reduce owners' equity. The resetting of adjustable rate mortgages to higher rates isn't exactly helping the situation, either. While rate adjustments and loan counseling are helping to stabilize the situation, Bernanke wants more. He has endorsed principal reductions as a means of keeping frustrated homeowners in their homes; the lender would receive a warrant for the reduction amount, which would be repaid by the owner with the proceeds of a sale at a higher price, rather than the current depressed value. (Note to owners: peace out now while you still can). Bernanke claims that lenders and securities owners are likely to lose more through foreclosure than by reducing what borrowers owe. Hot mess!
· Bernanke: More mortgage, home woes ahead [CNN Money]