The program will feature two parts - a new bond purchase program to support new lending by housing finance agencies and a temporary credit and liquidity program to improve access by housing agencies to credit sources for their existing bonds.
The new program will operate under a law that Congress passed in 2008 to bolster the housing industry, which has been battered by the worst slump in decades, a downturn that saw home sales and home prices plunge and mortgage defaults soar to record levels.
The government said the new effort was designed to provide hundreds of thousands of affordable mortgages for working families and enable the development and rehabilitation of tens of thousands of affordable rental properties.
Treasury, the Department of Housing and Urban Development and the Federal Housing Finance Agency said in a joint news release that the new program would provide temporary support to local housing financing agencies and encourage them to return to relying on market sources for their capital as quickly as possible.
The local and state housing finance agencies, which provide loans to people with low or moderate incomes, have had a hard time raising money to fund loans due to the housing crisis and credit crunch.
"This initiative is critical to helping working families maintain access to affordable rental housing and homeownership in tough economic times," Treasury Secretary Timothy Geithner said. "Through this initiative, the administration aims to help (the housing finance agencies) jump-start new lending to borrowers who might not otherwise be served and to better support the financing costs of their current programs - key components in stabilizing the housing market overall."
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