Importantly, "restrictive mortgage lending conditions do not seem to be linked to any insufficiency of bank capital or to a general unwillingness to lend," he said.

The Chairman said policymakers had taken steps to ease mortgage credit. The Federal Housing Finance Agency, the regulator of the GSEs, recently announced new rules that will provide mortgage lenders greater clarity about the conditions under which they will be required to buy back defaulted mortgages from Fannie Mae and Freddie Mac or otherwise address origination problems.

He made no mention of the qualified mortgage rules, which are still being written by the Consumer Financial Protection Bureau. The industry has claimed that lack of clarity on what constitutes a qualified mortgage has been an impediment to lending.

Bernanke also said the Federal Reserve will continue to do whatever it can to support the housing recovery but borrowers need to take some responsibility for their home purchase decisions.

" One lesson of the past few years is that the desire to own a home is not enough. Although many foreclosures resulted from job loss or other economic hardships, others occurred because people bought more of a house than they could afford, took out a loan that was not appropriate to their circumstances, or did not manage their resources well. Future homeownership must be built on a more solid foundation. And while much of the responsibility for building that foundation must lie with lenders and with regulators, consumers must do their part as well by acquiring the information and financial knowledge they need to make sound decisions. "

The Chairman emphasized financial education and said community organizations such as Operation Hope could be of great help to homebuyers in providing counseling services.

-- Written by Shanthi Bharatwaj in New York.
Disclosure: TheStreet's editorial policy prohibits staff editors and reporters from holding positions in any individual stocks.

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