While the current recession will be longer and more severe than predicted, housing will help lead the country out of the downturn, Boston Federal Reserve Bank President Eric Rosengren told the Massachusetts Mortgage Bankers Association at its annual meeting.

Rosengren said the housing market could stabilize this year, which he sees as a prerequisite for recovery.

"The recent reductions in mortgage rates, in part due to monetary policy actions, have enabled more borrowers than would otherwise have done so to purchase or refinance homes," Rosengren said.

"Expansion of this effort and encouraging greater [Fannie Mae and Freddie Mac] participation, should encourage borrowers who have equity and reasonable credit scores to purchase or refinance homes," he added.

Once the market stabilizes, mortgage securitization should be restructured to prevent future upheavals, Rosengren said.

Source: Reuters News