Many homeowners are facing a troubling dilemma these days as they are making payments on a home loan worth far more than their house. Fed Chairman Ben Bernanke addressed this issue today by imploring lenders to reduce the principle on loans for many people facing this problem as delinquency rates and foreclosures are continuing to soar amid declining housing prices. In their view, foreclosures must stop first in order to curb the falling housing prices and therefore curb the number of future delinquences and forclosures. The government's own attempts to stop this dangerous spiral have clearly not gone far enough and now private sector support may be needed.

From The New York Times:
The chairman of the Federal Reserve, Ben S. Bernanke, urged mortgage lenders and investors on Tuesday to reduce the principal on loans for many people whose homes are no longer worth as much as the amount they still have to repay. Noting that delinquency and foreclosure rates have soared over the last year, and that housing prices have not stopped falling, the Fed chairman warned that efforts by the government and by industry to prevent foreclosures had not gone far enough.