Fed's Stern says be cautious on mortgage reforms

GOLDEN VALLEY, Minnesota (Reuters) - U.S. regulators should use caution in reforming mortgage lending rules that have benefited many Americans, the president of the Minneapolis Federal Reserve Bank, Gary Stern, said on Tuesday.

Stern said many people were able to become homeowners because of innovative financing products like adjustable-rate mortgages, so "you don't want to throw the baby out with the bath water" by over-regulating them.

He was responding to questions after speaking to the Financial Planning Association of Minnesota.

Stern also said that while he was cautious about the economy's prospects, there were some signs of relatively strong activity including the fact that January retail sales were up.

(Reporting by Mark Felsenthal, writing by Glenn Somerville, Editing by Chizu Nomiyama)