Bernanke said the current rash of foreclosures represented a fundamental break from the traditional pattern of home loss. In the past, he said, individual homeowners who had been hit by a job loss, serious illness or injury or divorce found themselves unable to keep up their mortgage payments and were forced to give up their homes.

Now, he said, a new and very different force is “playing an increasing role in many markets: declines in home values, which reduce homeowners’ equity and may consequently affect their ability or incentive to make the financial sacrifices necessary to stay in their homes.”

Since the autumn, the Fed has been engaged in one of the swiftest reductions in the interest rates that the central bank controls. One aim of the rate cuts, Bernanke said, has been to help stabilize the housing and mortgage markets by making it less expensive to borrow for a house and easing the financial pain of sharp jumps in required payments under adjustable-rate mortgages.

In addition, the central bank has reversed a long-standing reluctance to fully use its regulatory powers by proposing strict new rules to protect consumers by outlawing a long list of what it labels “unfair and deceptive mortgage lending and advertising practices.” It has sought to extend its regulatory reach beyond its traditional purview of banks to include the nonbank lenders and mortgage brokers that are blamed for making many of the most troubled loans in the current crisis.

Nearly 2 percent of America’s 50 million-plus mortgage borrowers were three months or more behind on their payments by the end of 2007, up by half since 2004, before the crisis began. Lenders and servicers launched 1.5 million foreclosure proceedings last year, up by half from just the year before, and Bernanke predicted that the number would climb still higher this year.

The Fed chairman acknowledged that some borrowers were in so far over their heads that there was no way to keep them from being foreclosed upon. But, he added, in many instances homeowners could be kept in their homes through a combination of principal cuts and government-aided refinancings.

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