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President's message : Of mortgages and markets



Of Mortgages and Markets Wi n t e r 2 0 0 8 • R e g i o n F o c u s 1 JEFFREY M. LACKER PRESIDENT FEDERAL RESERVE BANK OF RICHMOND Of Mortgages and Markets The tumult in the mort-gage markets is on theminds of everyone these days. It’s certainly on the minds of all of us here in the Federal Reserve System. Responding to the recent uptick in mortgage foreclosures and delinquencies is a priority for all of the Federal Reserve banks. One way we can do that is by helping policymakers, jour- nalists, and business leaders put those trends into perspective. The truth is that the vast majority of homeowners have been able to make their monthly home payments on time, including many that hold what are commonly known as sub- prime mortgages. Many foreclosures are concentrated in specific regions, and significant portions of those were the product of risky investments made for speculative purposes. It’s also important to recognize that not all foreclosures can or should be avoided. For a variety of reasons, some indi- viduals end up with homes and mortgages that turn out to be unsustainably large relative to their current financial resources and their expected future earnings. Yet it’s hard to overstate how devastating losing a home can be to a family that was simply pursuing the dream of sustainable home ownership. Thus, the Richmond Fed has teamed up with the other banks of the Federal Reserve System to embark on the Homeownership and Mortgage Initiative. One of our tasks in this Initiative is to lead an outreach effort that can help prevent unnecessary foreclosures. Our Community Affairs Office is collaborating with state finance housing agencies, financial institutions, and nonprofits to provide foreclosure prevention training to Fifth District housing counselors. Our outreach efforts have already contributed to the creation of a foreclosure prevention task force in South Carolina and a 24-hour coun- seling hotline for North Carolina residents at risk of losing the

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