“We are continuing to examine potential foreclosure mitigation ideas that may be an appropriate and effective use of TARP resources,” he said in a press conference, without offering more details.  According to HousingWire, the short admission yields volumes about the battering Paulson and other outgoing Bush administration officials have taken at the hands of lawmakers and fellow regulators behind closed doors as of late for failing to “do more” to help a growing group of homeowners that cannot afford their mortgage loans.  FHA loans have been carrying too much of the mortgage load and it’s time that the conventional mortgage lenders offer more attractive home financing programs with refinance options and loan modifications.

On Nov. 12, Paulson announced that the Treasury had ditched the asset-management portion of the TARP proposal, opting instead to focus on capital purchases where most needed to revitalized lending activity and to allow banking institutions the chance to earn their way out of the current financial crisis. “I will never apologize for changing an approach or strategy when the facts change,” Paulson told reporters in a question-and-answer session after the announcement at the time.  “The most important thing we can do to mitigate the housing correction and reduce the number of foreclosures is to increase access to lower cost mortgage lending,” he said. “The actions we have taken to stabilize and strengthen Fannie Mae and Freddie Mac, and through them to increase the flow of mortgage credit, together with our bank capital program, are powerful actions to promote FHA mortgage lending.”

Not long after that pronouncement, the Fed announced on Nov. 25 that it would intervene directly in the MBS and ABS markets, using $20 billion in TARP funds as part of backstop for a plan designed to jump start frozen asset-backed securitization activity.  While signaling a softening of his stance, Paulson also remained steadfast in his defense of existing actions taken thus far, including a foreclosure freeze by both Fannie Mae and Freddie Mac that runs through early next year.  “This Administration has used a variety of authorities to reduce avoidable foreclosures, through HUD programs, through the FDIC’s program with IndyMac, through our support and leadership of the HOPE NOW Alliance, and through the new GSE servicer guidelines announced November 11 that will set a new standard for the entire industry for streamlined loan modification agreements,” he said.

Whether the new Hope for Homeowners loan guidelines will set a standard or fall short of one is clearly a matter of perception; the FDIC’s Bair has roundly criticized the plan, saying it “falls short of what is needed to achieve widescale loan modifications of distressed mortgages.” Instead, Bair has pushed for federal insurance of recidivism risk on modified mortgage loans, a move that FDIC analysts have estimated will require roughly $24 billion of TARP funding. See earlier coverage.