The U.S. Treasury Department has already committed $350 billion of the $700 billion rescue fund, including $13.4 billion for troubled automakers, according to Treasury Secretary Henry Paulson, and Congress will need to release the rest soon to keep emergency funds available to aid the markets.

“Today, we have acted to support General Motors and Chrysler, with the requirement that they move quickly to develop and adopt acceptable plans for long term viability. This step will prevent significant disruption to our economy, while putting the companies on a path to the significant restructuring necessary to achieve long-term viability,” Paulson said in a statement Friday. “…As a result of this decision, Treasury effectively has allocated the first $350 billion from the TARP (Troubled Asset Relief Program.) It is clear… that Congress will need to release the remainder of the TARP to support financial market stability.”

He did, however, say that he has “confidence that we have the necessary resources to address a significant financial market event,” based on the powers of the Federal Reserve, the FDIC, and the money that has been committed but not yet disbursed.

Paulson mentioned his intention to discuss plans for moving forward with the economic team of President-elect Barack Obama and with congressional leadership.

The Secretary may get a fight for the requested money from several members of Congress though. Congressman Barney Frank, D-Mass., Chairman of the House Financial Services Committee has vowed to block the use of more funds unless Treasury is committed to allotting a great deal of it toward helping foreclosure-bound homeowners.

“They’re not going to get the (money) unless they get very serious about the foreclosure modifications and showing us how we’re going to get some lending out of the banks,” Frank said earlier this month.

To date, in addition to the commitment of $13.4 billion this week for the auto industry, the Treasury has allocated $315 billion of the original $350 billion bailout funds for providing more resources for banks and American International Group as well as  $20 billion for use in consumer credit markets.

The National Association of Home Builders reported that its index of home builder sentiment, a measure of confidence in the housing market, remained at a record low reading of 9 in December. That number reflects the lowest point on record since the group began its survey in 1985.

Any reading below 50 is an indication that more builders view housing market conditions as poor rather than favorable.

“The crisis continues,” said NAHB Chairman Sandy Dunn  in a statement. “While builders are doing everything we can in the way of price and non-price incentives to move new homes off the books, buyers are afraid to move forward, and in any case there is almost no way to compete with the cut-rate product that is continually flooding the market from mounting foreclosures.”

The NAHB hopes the government will give buyers more incentive to move forward by extending more tax credits and interest rate modifications in coming months.

“Expanding the first-time buyer tax credit and providing government action to reduce mortgage rates would go a long way toward arresting this downward spiral, just as a combination of similar moves worked in the 1970s to boost the housing market and economy,” NAHB Chief Economist David Crowe said.

Currently, U.S. home builders are at a stand still, constructing very few new homes, waiting for current inventories to get worked off. The NAHB sees no immediate hope for market improvement.

“We have seen no improvement over the past month in terms of sales conditions for new homes,” Crow lamented. “In fact, certain factors have gotten progressively worse, not the least of which is the job market, where massive layoffs are having a devastating effect on consumer confidence.”

Without government intervention, the NAHB does not predict a quick end to landslide of foreclosures and feeble new home sales.

The rate of mortgage loan delinquency in the U.S. increased to 3.96 percent in third quarter of 2008,  the seventh consecutive quarterly rise  and a 12 percent increase from the second quarter of this year, according to a survey from credit research company TransUnion.

“As expected, the mortgage sector continued to experience increases in the delinquency rate due to worsening economic conditions in both the labor and financial markets,” said Keith Carson, a senior consultant in TransUnion’s financial services group in a release Monday.

According to the TransUnion survey, a mortgage is delinquent if a borrower is 60 days late or more on the payments. Delinquencies are a traditional predictor of mortgage foreclosures and with the current rate up 54 percent from the same quarter last year, more heartache in the housing market is likely to follow.

Florida led the nation in the highest rate of delinquency at 7.82 percent. Nevada was a close second with a rate of 7.71 percent. The state was with the lowest delinquency pace was North Dakota at 1.35 percent. South Dakota and Montana also had relatively few late mortgages with rates of 1.6 percent and 1.71 percent, respectively.

While West Virginia was the only state to experience a decline in its delinquency rate during the third quarter (the rate fell by 0.39 percent), the District of Colombia saw the greatest increase with a 42.7 percent jump from the previous quarter.

“Our forecasting models predict that the national 60-day mortgage delinquency rate among mortgage borrowers will continue to rise in the fourth quarter of 2008 and throughout 2009, with the 2008 delinquency rates ending at 4.66 percent and 2009 rates possibly reaching 7 percent or greater,” said Carson.

There is some hope on the horizon, however. “Depending on the severity of the capital markets crisis, the ultimate outcome of the decline in the U.S. auto industry and the timing of a recovery in retail sales,” he commented, “we see the possibility of a flattening of mortgage delinquencies as the economy begins to stabilize and some sectors of the country begin to improve in the second quarter of 2010.”  

Federal Reserve Chairman Ben Bernanke advocated for more government intervention in the national foreclosure crisis Thursday in remarks before a Fed housing conference. He called on government officials to take steps such as buying up bad mortgage debt and refinancing endangered loans into more affordable mortgages.

“Despite good-faith efforts by both the private and public sectors, the foreclosure rate remains too high, with adverse consequences for both those directly involved and for the broader economy,”  Bernanke said. “More needs to be done.”

He also added that the housing crisis has “become inextricably intertwined with broader financial and economic developments,” citing the more than 2.25 million foreclosures expected to take place by the end of this year and the millions of homeowners who currently owe more on their mortgages than their homes are worth.

“A slowing economy has in turn reduced the demand for houses, implying a further weakening in the mortgage and housing markets,” Bernanke said. He added that “weakness in the housing market has proved a serious drag on overall economic activity. Steps that stabilize the housing market will help stabilize the economy as well.”

The Chairman recalled that the Fed has taken its own drastic measures to aid the faltering economy. It has lowered it target interest rate to 1 percent from 5.25 percent in August 2007. Many analysts believe the rate may be slashed again by a 0.5 percent point at its next meeting Dec. 15-16.

“To the extent that more accommodative monetary policies make credit conditions easier and incomes higher than they otherwise would have been, they support the housing market,” he said.

Bernanke suggested specifically that the U.S. government increase its efforts on the Hope For Homeowners program, a refinancing effort for struggling borrowers. He also recommended that the central government “purchase delinquent or at-risk mortgages in bulk and then refinance them into the (Hope for Homeowners) or another FHA program.”

The number of foreclosure filings increased again in the latest month, growing by 25 percent from October 2007, according Irvine, Ca.-based RealtyTrac.  Unfortunately this trend has been in place for some time and there seems to be no end in sight.

“October marks the 34th consecutive month where U.S. foreclosure activity has increased compared to the prior year,” said James J. Saccacio, chief executive officer of RealtyTrac.

There were 279,500 U.S. homes in some stage of the foreclosure process last month, up 5 percent from September figures. That accounts for one out of every 452 households across the country encountering a default notice, auction sales notice or a bank repossession.

“The really sobering reality for us is that despite these various state programs that are artificially keeping the numbers down, we are still up 25% from a year ago,” said Rick Sharga, senior vice president of RealtyTrac in reference to a new California law enacted in September.

The Golden State law calls for mortgage lenders to personally contact and negotiate with borrowers before beginning the foreclosure process. This law has delayed, but not permanently reduced, the number of foreclosures on the books.

The states with the highest rates of foreclosure were Nevada, Arizona, and Florida, according to RealtyTrac data.  Nevada had one foreclosure filling for every 74 homes in October, six times the national rate. Last month marks the 22nd month that the state has had the highest foreclosure rate in the country.

Arizona saw its foreclosure filings rise to 17,507, an 35 percent increase from September and a 176 percent jump during the past year. The foreclosure rate there is now one out of every 149 households.

Foreclosures in Florida grew to 54,324 in October, up 13 percent from the previous month and 80 percent from the same time a year ago. One out of every 157 properties is now in some stage of foreclosure in Florida.

As to when things will start to turn around, Sharga said, ““It took us the first half of the decade to get into this problem, so it is probably going to take a couple of years to get out.”

After recently creating a program to save troubled mortgage and finance banks, the Treasury Department and the Federal Deposit Insurance Corp. (FDIC) are officially working on a plan that takes aim at the foreclosure crisis underpinning current economic turmoil. Under the powers of the new Emergency Economic Stabilization Act awarded to the Treasury Secretary, the joint effort is creating a proposal to curb “avoidable” foreclosures.

“The FDIC is working closely and creatively with Treasury to realize the potential benefits of this authority,” said Sheila Bair, chairwoman of the FDIC before the Senate Banking Committee Thursday.

She also gave some examples of the team’s brainstorming efforts.

“Loan guarantees could be used as an incentive for servicers to modify loans,” Bair said. “Specifically the government could establish standards for loan modifications and provide guarantees for loans meeting those standards. By doing so, unaffordable loans could be converted into loans that are sustainable over the long term.”

Bair has had experience in streamlining mortgage modification procedures recently, when the failing home loan lender IndyMac was taken into conservatorship by the FDIC. She created a standard process to modify loans that were delinquent by 60 days or more.  Under this program, roughly 40,000 of the 60,000 loans on IndyMac’s books would qualify for modification help.

“Through this week, IndyMac Federal has mailed more than 15,000 modification proposals to borrowers and has called many thousands more in continuing efforts to help avoid unnecessary foreclosures,” Bair said. “While it is still early in our implementation of the program, over 3,500 borrowers have accepted the offers and many more are being processed.”

According to the Chairwoman, the IndyMac loan modifications have saved borrowers an average of $380 on their monthly mortgage payments.

Although she recognized that not all homeowners will be able to refinance and save their homes under the available programs, Bair emphasized that “minimizing foreclosures is important to the broader effort to stabilize global financial markets and the U.S. economy.”