Homeowners may find themselves in real trouble due to the consequences of defaults on mortgages, according to Ben Bernanke, who is the Chairman for the Federal Reserve. Today, Mr. Bernanke gave a testimony that he had prepared to the House Financial Services committee, in which he also stated that when the markets correct themselves, it’s usually because of severe financial losses that had been incurred by investors. He pointed out that subprime mortgage market has already been sharply adjusted.

But he also said that the there are measures being taken by the Federal Reserve in order to help reduce the amount of foreclosures and that there was an urgent need to improve the standards for underwriting.

Mr. Bernanke’s testimony came just forty eight hours after the slashing of federal fund rates from 5.25% to 4.75%, and the slashing of the discount rate to 5.25% from 5.75%. He did note that the developments in recent days with regards to the subprime-mortgage industry did trigger some uncertainty about structured products and helped to raise concern about economic activity consequences.

Lastly, he did add that the FOMC will continue its evaluation of the efforts of the developments and will do its best to maintain growth in the economy and foster price stability.