The bill is entitled H.R. 384, the TARP (Troubled Asset Relief Program) Reform and Accountability Act. It was presented by Representative Barney Frank (D-Mass.), who is chairperson of the House financial Services Committee. If adopted, the bill would require the Treasury to create a new program intended to stimulate the demand for home purchases and in turn, decrease current inventory levels. This would be accomplished by creating affordable mortgages for qualified buyers through the use of interest rate buy downs.
The bill would change the TARP provision of the 2008 Emergency Economic Stabilization Act in order to make significant strides towards the reduction of foreclosures, reinforce accountability, and close up any loopholes. Areas with the highest inventories of foreclosed properties would be considered by the Treasury.
Foreclosure relief would come from the second half of the $700 billion which was authorized by Congress in late 2008. $50 billion of the $700 billion would be earmarked for foreclosure mitigation, and would be put in place by March 15 of this year. This would in turn allow the Treasury to start allocating remaining TARP funds for the plan by a date no later than April 1.
The bill would offer liability protection to loan servicing organizations who conduct loan modifications. The loan servicers would be required to regularly report to the Treasury. The plan would only be available to residences which are occupied by the owner.
The Treasury would also be able to offer support for commercial mortgage-backed securities and commercial real estate loans.
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