The Treasury Department's foreclosure prevention and mortgage program, which will receive $50 billion in funding, will be finalized in the next few weeks, a senior official said. The funds for the program will come from the $350 billion Troubled Asset Relief Program (TARP). As a condition for approving the TARP funds, Congress received assurances from the Treasury Department that significant resources would be deployed to aid struggling homeowners. An excerpt from a fact sheet on the program is below:
There is bipartisan agreement today that stemming foreclosures and restructuring troubled mortgages will help slow the downward spiral harming financial institutions and the real American economy. Many Congressional leaders, housing advocates, and ordinary citizens have been disappointed that the Troubled Asset Relief Program was not aimed at ending the foreclosure crisis. We will soon be announcing a comprehensive plan that builds on the work of Congressional leaders and the FDIC. Among other things, our plan will:
•Drive Down Overall Mortgage Rates: The Treasury Department and the Federal Reserve remain committed to expand as necessary the current effort by the Federal Reserve to help drive down mortgage rates – freeing up funds for working families – through continuation of its efforts to spend as much as $600 billion for purchasing of GSE mortgage-backed securities and GSE debt.
•Commit $50 Billion to Prevent Avoidable Foreclosures of owner-occupied middle class homes by helping to reduce monthly payments in line with prudent underwriting and long-term loan performance.
•Help Bring Order and Consistency to the various efforts to address the foreclosure crisis by establishing loan modification guidelines and standards for government and private programs.
•Require All Financial Stability Plan Recipients to Participate in Foreclosure Mitigation Plans consistent with Treasury guidance.
•Build Flexibility into Hope for Homeowners and the FHA to enable loan modifications for a greater number of distressed borrowers.
