US Treasury Secretary Henry Paulson said today he hoped to have a mortgage relief plan ready by the weekend and urged Congress to give local governments more borrowing power to ward off foreclosures.
The Bush administration is seeking agreement with the mortgage industry to freeze interest rates on subprime loans whose rates are about to reset sharply highly in the hope that many of these borrowers can stay in their homes.
In addition, the administration is pressing Congress to take others steps it argues would ease strains in the US housing market.
"Today, we are proposing to allow state and local governments to temporarily broaden their tax-exempt bond programs to include mortgage refinancing," the US Treasury chief told a housing conference sponsored by the Office of Thrift Supervision.
Mr Paulson has been pushing Congress on other measures, including modernizing the Federal Housing Administration and government-sponsored enterprises like Freddie Mac and Fannie Mae that play key roles in keeping the flow of mortgage funds going.
In the past week, Mr Paulson has met US lending regulators and executives from several sectors of the mortgage industry to develop a plan to help subprime borrowers - people with spotty credit records who were able to get mortgage loans during the boom years of the 1990s and early 2000s but now face a squeeze.
"We are determined to bring this diverse group together, to develop a set of standards that will be implemented across the industry, from the largest mortgage servicers to the smaller specialty servicers," Mr Paulson told the National Housing Forum.
"An industry-wide approach is critical to the effectiveness of this effort," he added.