The House Financial Services Committee released draft legislation on Friday that will revamp the Troubled Asset Relief Program (TARP), requiring that a minimum of $50 billion of the remaining $350 billion be used for foreclosure mitigation to help consumers.

Among other things, the committee wants the government to pay down second liens that are impeding loan modifications. It also wants to continue the practice of offering cash incentives to residential servicers that engage in loan modifications. The effort is focused solely on owner-occupied homes.

In October, President George Bush signed a $700 billion bailout bill for the mortgage and credit markets. Half the money has already been spent. Only Congress can release the balance of the money to the Treasury, which is managing the TARP.

The committee will hold a hearing on TARP next Tuesday, Jan. 13. "We want to make it clear what our conditions will be," said House Financial Services Committee chairman Barney Frank, D., Mass.

Frank also wants the Federal Housing Administration (FHA) and the Office of Management and Budget to tell the committee what additional resources (staffing and technology) the mortgage insurance agency needs to keep up with the demand for FHA loans and to prevent fraud and abuses in the lending program.

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