The Federal Reserve must do more to directly address the problems in the U.S. housing market, including stemming foreclosures that could contribute to a further downward spiral in the economy, a top central bank official said.

Elizabeth Duke, a member of the Fed’s Board of Governors, said in prepared remarks that not enough had been done in the area of modifications. Duke lamented a lack of decisive government action, which she said was hurting the efforts of homeowners and banks to renegotiate troubled home loans.

"As long as uncertainty exists as to the scope and terms of the additional steps that likely will be offered, borrowers, lenders, and servicers will continue to hold out in hope of securing a better deal," Duke told a conference sponsored by the Global Association of Risk Professionals.

Duke said housing activity remains extraordinarily weak, pointing to both plunging demand and tougher lending conditions as culprits for the long-lasting crisis in the sector.
(Reuters)