Two top U.S. Federal Reserve officials on Thursday called for a more community-focused approach to the country's ongoing foreclosure crisis, which is weighing on its economic recovery.

Sandra Pianalto, president of the Federal Reserve Bank of Cleveland, stressed the U.S. central bank feels a great sense of urgency in getting the housing market back on its feet.width=398

A healthy housing sector is critical both to the overall economy and to a sustainable economic recovery, she told a conference on neighborhood stabilization strategies.

Neither Pianalto nor Boston Federal Reserve Bank President Eric Rosengren addressed the outlook for monetary policy in their remarks at the conference in Washington.

Both officials said one-size-fits-all remedies don't work for fighting foreclosures, which played a central role in the U.S. financial and economic crisis.

Rosengren said community problems are often side-lined in a public policy approach focused on bringing down the high numbers of so-called real-estate owned, or vacant, properties.

Rather than treating the symptom -- the high REO problem -- we need to better understand how to resolve the more general problems in communities that lead to higher concentrations of REOs and exacerbate the effects of high REOs, he said.

New England communities with a high number of real-estate owned properties fared worse on measures such as public health, public safety and education even before the crisis hit, he said.

More state and federal revenue sharing focused on providing flexible funds could help local governments target the pressing needs in their communities, be it a lack of teachers or police, Rosengren said.

The longer houses remain vacant, the more damage is done to these communities, with dropping property values and increased crime, both Fed officials said.

In many low-income communities, decades of progress have been wiped away during the past few years, Pianalto said.

The problem of large numbers of real-estate owned properties in the Cleveland Fed's district is severe, resources are limited, and the need for assistance is immediate, Pianalto said.

The housing market in her district, which includes Ohio, western Pennsylvania, eastern Kentucky, and the panhandle of West Virginia, is still far from recovery, she added. Cleveland is often described as the epicenter of the housing crisis.

To break the destructive cycle of the foreclosure crisis, policies must target multiple points of the breakdown in the housing market, she said.

The Fed, which has sponsored 280 foreclosure-related events across the U.S., will continue to support community leaders and policy-makers through research and outreach, she said.

(Reporting by Kristina Cooke, Editing by Chizu Nomiyama)