Fed Governor Randall Kroszner said rising mortgage foreclosures are an "urgent problem" and called on Congress to pass a Fannie Mae and Freddie Mac regulatory bill.
Speaking at the NeighborWorks America Symposium in Cincinnati on Wednesday, Kroszner said foreclosures lead to a loss of one-fifth to one-half of an individual's loan.
"As the Federal Reserve builds on its consumer protection efforts in order to mitigate foreclosures for current homeowners, we are also concerned about the impact current mortgage market problems are having on individual communities," he said.
He noted the delinquency rate has doubled in the past year and said as of February, one in four subprime adjustable-rate mortgages was seriously delinquent, meaning the borrower was either in foreclosure or ninety days or more past due on a payment.
"Delinquency rates have risen on most other types of mortgages as well, but these increases have been more recent and less dramatic than those in the subprime segment. Foreclosures have also risen appreciably," he said. "Lenders initiated roughly one-and-a-half million foreclosures last year, up 53% from the previous year."
Kroszner also urged Congress to pass Federal Housing Administration overhaul legislation and repeated that lenders should consider mortgage writedowns.
Kroszner did not speak about monetary policy or the economic outlook in his speech.
By Stephen Huebl and edited by Nancy Girgis