The Federal Reserve has ``great concern'' about the surge in mortgage delinquencies and foreclosures, said Sandra Braunstein, director of the Fed's Division of Consumer and Community Affairs.
By Craig Torres and Scott Lanman
March 27 (Bloomberg) -- The Federal Reserve has ``great concern'' about the surge in mortgage delinquencies and foreclosures, said Sandra Braunstein, director of the Fed's Division of Consumer and Community Affairs.
``The impact of mortgage delinquency and foreclosure on consumers and communities is one of great concern,'' Braunstein said in testimony to a House Financial Services subcommittee hearing on subprime mortgages in Washington. ``We have much work ahead of us, as there is no one sure and easy fix.''
While the Fed is examining whether to set new regulations to tighten lending standards that go beyond past unenforceable ``guidance,'' it has to be careful about restricting credit, Braunstein said. The threat of lawsuits stemming from perceived violations of new rules ``could end up cutting off, constraining credit,'' she said under questioning.
Congress has been critical of federal bank regulators in recent weeks for failing to curb lax lending standards during the biggest mortgage boom in American history, which led to rising foreclosures and delinquencies. Last week, Senate Banking Committee Chairman Christopher Dodd, a Connecticut Democrat, said the Fed failed to act on early signs of trouble.
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