Federal Reserve Chairman Ben S. Bernanke told a gathering of the Independent Community of Bankers of America that they need to do a lot more to help distressed homeowners, especially those facing foreclosure. Bernanke called earlier today for a “vigorous response” to help stem rising home foreclosures, saying some banks and lenders could do more to help ease the U.S. housing crunch and keep more American’s in their homes.

Bernanke’s remarks, which can be read in their entirety here, are groundbreaking because they signify the first time someone with any power over the direction of the financial markets has publicly asked a question so many of us have been asking for over a year now… what’s the point in forcing people out of their homes when they can afford to pay their pre adjustable rate payments. As Larry Rubinoff asked in a guest blog post on FlippingFrenzy.com this past weekend, would it not be better to freeze the interest rate for a homeowner who has been paying at that rate rather than foreclosing and kicking them out onto the streets? In the extreme, would it not be better to cut the rate in half rather than foreclose?

At the end of the day, the proof will be in the pudding. If the bankers chose to respond vigorously, more of us will win. If they don’t, Bernanke’s 3,175-word speech will have been for not.

You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.