Troubled Asset Relief Program

Obama is proposing to use the $350 billion left in the Trouble Asset Relief Program differently from how Bush and Treasury Secretary Henry Paulson used the first half. These funds are used for mortgage relief, by lowering interest rates and reducing foreclosures. The TARP proposal would eliminate the repayment feature of the first-time homebuyer tax credit and expand it to all home buyers, reinstate the higher mortgage loan limits for FHA, Fannie Mae, and Freddie Mac, and lower mortgage interest rates through a buy-down program.

The National Association of Realtor's Chief Economist Lawrence Yun comments on the proposal. He says that with the tax credit an additional 2.22 million households would meet the income requirements to qualify for a loan, but only one in four would make a purchase, resulting in an additional 555,000 home sales nationwide.