WASHINGTON, Dec. 4  -- Federal Reserve Chairman Ben Bernanke said the government should increase its efforts to stem the sharp rate of U. S. foreclosures.

"Despite good-faith efforts by both the private and public sectors, the foreclosure rate remains too high," Bernanke said Thursday in a prepared speech at the Federal Reserve System Conference on Housing and Mortgage Markets in Washington.

Bernanke said 2.25 million U. S. homes could end up in foreclosure in 2008, "up from an average pace of less than 1 million homes during the pre-crisis period."

"As house prices have declined, many borrowers now find themselves 'under water' on their mortgages -- perhaps as many as 15 to 20 percent by some estimates," Bernanke said.

Bernanke outlined several alternatives for dealing with the issue, including the reduction of mandatory insurance costs and granting the Federal Housing Administration permission to "to tailor these premiums to individual risk characteristics."

The government could also share costs with lenders who reduce borrowers' monthly payments, he said.

After a lender took steps to reduce monthly payments to 38 percent of income, "the government could bear a portion of the incremental cost of reducing the mortgage payments beyond 38 percent, say to 31 percent, of income," he said. (UPI)