. under the modified plan, the loss - sharing rate declines from 50 percent on a loan with an ltv of 100 percent at the time of modification to 20 percent on a loan with a ltv of 150 percent. loans with ltvs of more than 150 percent at the time of modification do not qualify for losssharing. an alternative way to address this concern would be to base the amount of the government insurance payment on the loss in value relative to the appraised value of the property at the time of the loan modification. addition, scale efficiencies could be achieved by contracting with specialty firms ( perhaps including the gses ) capable of re - underwriting large volumes of loans to make them eligible for h4h or another program. the treasury has already considered how to undertake bulk purchases as part of its work under eesa, and the federal reserve has submitted to the congress an analysis of bulk purchases per a legislative requirement in the h4h bill. even so, this program could take some time to get up and running, and the re - underwriting required for h4h loans would likely take more time and incur greater operational costs than other plans. but such an approach could result in many homeowners being refinanced into sustainable mortgages. conclusion the housing market remains central to the economic and financial challenges that we face. because housing and mortgage markets are tightly interlinked with the rest of the economy, actions to strengthen financial markets and the broader economy are important ways to address housing issues. by the same token, steps that stabilize the housing market will help stabilize the economy as well. in this regard, reducing the number of preventable foreclosures would not only help families stay in their homes, it would confer much wider benefits. significant efforts have been taken in this direction, but more can be done. today i have briefly discussed a few promising options, which are not necessarily mutually exclusive. as we as a country consider ways to address our financial and economic challenges, policy initiatives to reduce the number of preventable foreclosures should be high on the agenda.

of falling underwater if house prices fell. yet banks had limited loss - absorbing capacity and were heavily reliant on wholesale short - term funding, and interconnections across the financial system were opaque. when housing markets weakened, opacity contributed to investors'fears, short - term funding pulled away, and excessive leverage led to fire sales as financial institutions experienced losses and major firms failed or were rescued by the government. the economy experienced a deep recession, and unemployment ultimately reached 10 percent. the current resilience of the financial sector points to substantially more limited spillovers from recent events. the failures of silicon valley bank, signature bank, and first republic bank showed excessive reliance at those institutions on uninsured deposits and excessive exposure to interest rate risk. even so, the overwhelming majority of banks have strong balance sheets with limited leverage, high levels of lossabsorbing capacity, and healthy liquidity. moreover, household and business balance sheets are generally strong, and the credit quality of loans is generally much better than on the eve of the global financial crisis. leverage across key parts of the financial sector, including especially the largest banks and broker - dealers, is much lower than in the mid - 2000s. even so, we remain vigilant to the potential for vulnerabilities to emerge. three areas of potential concern have been the focus of our supervisory and regulatory work. first, recent stresses highlighted the importance of effective liquidity and interest rate risk management, including both reliance on uninsured deposits and exposure to duration risk in asset holdings. while the resilience of the financial sector will limit the spillovers from recent events, i expect those strains to lead to a further tightening in credit supply from banks that will weigh on economic activity. second, it is also important to assess how changes in the financial sector, including expanded use of online banking and shifts in behavior that may be driven by access to social media, may alter the potential speed of deposit flows. third, the weakness in some sectors of commercial real estate will affect the credit quality of those types of commercial real estate loans and thereby 3 / 4 bis - central bankers'speeches place strains on lenders with high concentrations of those loans. changes in work preferences and the increase in remote work is leading to a reassessment of the outlook for office and associated retail properties, and it will take time for the extent of that weakness to become clearer. ongoing regulatory capital initiatives later in the afternoon, during the second session of the