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The Obama administration could inject as much as US$35 billion ($40.5 billion) into the economy to help local housing agencies continue to provide mortgages to low and moderate income families.
According to a report in The Australian, the injection of cash is expected to relieve the pressure on government-operated housing finance agencies, which have been struggling to find funding.
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The agencies are crucial to low to moderate income earners who cannot otherwise obtain lower rate mortgages.
Under the proposed cash injection project, the Obama administration would buy the debt that these housing agencies rely on for financing.
The administration will effectively try to jump start new mortgage originations by purchasing anywhere up to $US20 billion of new, fixed rate bonds issued by housing agencies.
The agencies typically fund about 100,000 mortgages a year.
