Finance news

James B. Lockhart III, vice chairman of WL Ross & Co. and the former director of the Federal Housing Finance Agency, said the U.S. housing decline may not be over.

Lockhart said at a conference in New York that he’s concerned there may be “another leg down” because of the pace of foreclosures. Foreclosures will “spike” unless the Obama administration’s programs to spur home loan modifications do more to reduce homeowners’ debts, he said.

“We need to be more aggressive in writing down mortgages and reducing principal to keep people in homes,” he said. “A spike could be pretty big.”

Lockhart also said he expects that “hundreds of banks will be taken over.” The possibility comes from troubles in commercial real estate, which lags behind housing in finding a market bottom, he said payday loans.

“We are overbuilt in many areas,” he said.

Lockhart, 63, joined the distressed-investment unit of Atlanta-based Invesco Ltd. this year after serving as head of the FHFA. WL Ross was among nine asset managers chosen by the Treasury Department to take part in the $40 billion U.S. Public- Private Investment Program, under which taxpayer and private capital will be paired to invest in mortgage bonds.

WL Ross manages funds that own American Home Mortgage Servicing Inc. and made “substantial investments” in bond insurer Assured Guaranty Ltd., according to a statement in August announcing Lockhart’s hiring.

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