New York Fed president urges home loan balance reductions

A top policymaker for the U.S. Federal Reserve Board recently stated his belief that consumers who are suffering from severe financial difficulties should receive government assistance in reducing their home loan balances.

William Dudley, the president of the Federal Reserve Bank of New York, said in a recent statement that taxpayers and investors should cover the cost of reducing troubled borrowers' outstanding home loan balances as part of a larger plan for stimulating the flagging housing recovery, according to a report from the Financial Times. In particular, Dudley believes Fannie Mae and Freddie Mac, the government-controlled mortgage backers, should be the ones to reduce loan balances as a means of preventing foreclosures from increasing.

In recent months, Fannie Mae and Freddie Mac have enacted their own plans for reducing future foreclosures by requiring that borrowers have higher credit ratings to qualify for government-backed mortgages. As such, it's more important than ever for consumers to order copies of their credit report and search them for unfair or errant markings that may be lowering their scores.