Yesterday, Federal Reserve Chairman Ben Bernanke, in remarks to the Operation HOPE Global Financial Dignity Summit, said the housing market still has a way to go in its recovery.
Noting, “(O)verly tight lending standards may now be preventing creditworthy borrowers from buying homes,” Bernanke did not propose any new solutions. The last time the Fed gave others advice on addressing the issue, it was unwelcome according to Reuters.
Bernanke also noted that delay in the overall economic recovery (including employment and housing prices) is discouraging potential buyers. After listing some positive signs in the housing market like increased buyer traffic, nine consecutive months of home price increases, improved builder confidence and increased residential investment, Bernanke acknowledged that twenty percent of homeowners are still underwater. He expressed concern that low-income and minority communities have been disproportionately affected. Bernanke said that redlining (where lenders are reluctant to lend in minority neighborhoods) and pricing discrimination (where minorities are charged higher fees for loans) continue.