lenders and communities alike are woefully underresourced and unprepared for the volume of real estate that will need to be processed. some attention has already been focused on getting renters or owners into real estate owned ( reo ) and vacant properties and thus off of servicers'books – something that is in the shared interest of servicers, investors, and communities, particularly as the inventories of these types of properties mount. at the national level, there is some movement to enable state and local governments, as well as nonprofits, to purchase properties from servicers'reo inventories where sales are otherwise stagnant. such efforts are challenging in many areas because of a lack of financial resources and experience in the kinds of activities that are required. some help will be provided through the housing and economic recovery act of 2008, in which the congress set aside $ 3. 92 billion to assist state and local governments with reo purchases and related efforts. the department of housing and urban development created the neighborhood stabilization program ( nsp ) to distribute these funds. many servicers are stepping up their efforts to sell their large and growing inventories of reo properties, although setting an appropriate price in the current environment remains difficult. to facilitate reo sales, the national community stabilization trust ( ncst ), a new entity formed by four national nonprofit intermediaries, is trying to create a common platform for servicers to efficiently sell reo properties to public entities and nonprofit organizations. some reo owners, such as fannie mae, are also creating dedicated sales channels to sell reo properties to public entities and nonprofits, either through the ncst or through discounted bulk sales. and some local governments are crafting comprehensive approaches using the nsp funds to bring in private - and public - sector entities to manage and sell reo inventories. the federal reserve has also taken steps to help address the costs of foreclosures on communities. the community affairs offices of the board of governors and all 12 reserve banks held a series of forums in 2008, entitled " recovery, renewal, rebuilding, " that explored the problems and highlighted promising solutions. we have also partnered with neighborworks america to support its efforts to help community leaders grappling with these issues ; that effort has led to the creation of new tools, training, and the spread of information. but current efforts are not sufficient to deal with the scale and scope of the problem, and more needs to

with community groups and governments to support strategies to stabilize communities affected by foreclosure. they can bring invaluable technical capacity to plan and execute stabilization efforts. banks can also support efforts to reuse reo properties by providing home loans to new homebuyers and by financing nonprofit entities and others for the acquisition and rehabilitation of reo properties. in addition, they can help victims of foreclosure to rebuild their credit histories and thereby facilitate their re - entry into the economic mainstream. finally, regulators should consider whether existing regulations regarding real estate held for extended periods of time on bank balance sheets act as an obstacle to creative solutions to the foreclosure problem. conclusion in summary, broad policy measures are a central ingredient to restoring the health of the u. s. economy and global financial system. however, as i have discussed today, there is also a pressing need for more targeted policy measures that specifically address the current problems in the housing sector. we need considerable public support for housing finance until private credit and securitization markets are restarted. we need to strengthen and augment our efforts to reduce preventable foreclosures. in addition, we need to turn far greater attention to limiting the costs of foreclosures that do occur. such efforts are not only in the interest of the families who are directly affected and their immediate communities, but are also in the interest of the financial institutions involved and the broader economy. because much of the cost does not occur as soon as a foreclosure has been initiated and can grow with time, we must be forward - looking and affirmatively engage in efforts to mitigate the consequences now. as community bankers, you have a long history of engagement in your communities. you have served on the boards of public and nonprofit entities focused on housing. you have built habitat for humanity houses, and you have rebuilt entire neighborhoods following natural disasters. your financial resources will be needed as we work toward solutions for the current crisis, but, even more important, your experience, expertise, contacts, and creativity will be needed. if you believe in the saying that " all real estate markets are local, " you also understand that it will take local knowledge to assess community needs and craft solutions. if you are not quite sure where to start, contact your local housing nonprofit or federal reserve bank. contact municipal authorities or housing counselors. partner with other banks in your market or do it alone. but do it today. as always, your