If the rumors are true, it looks as if alleged back-room battles with Federal Desposit Insurance Corp. chairman Sheila Bair may be softening up Hammerin’ Hank, as his tenure at the U.S. Treasury comes ever nearer to its close: in remarks delivered Monday afternoon, Henry Paulson suggested that he might yet look to allocate funds from the Troubled Asset Relief Program to support aid for troubled homeowners. “[W]e 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. But 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, according to HousingWire‘s key sources, for failing to “do more” to help a growing swath of borrowers that cannot afford their mortgages. 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. Which is a good thing, in this case, lest he be forced to apologize again. The Treasury chief had told lawmakers as recently as Nov. 18 that he didn’t believe additional actions were needed to support housing and the nation’s ailing mortgage markets. “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 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 (FNM) and Freddie Mac (FRE) 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 modification procedures,” he said.() Whether the new 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 modifications of distressed mortgages.” Instead, Bair has pushed for federal insurance of recidivism risk on modified mortgages, a move that FDIC analysts have estimated will require roughly $24 billion of TARP funding. See earlier coverage. Paulson’s remarks Monday afternoon suggest that the plan is at least garnering consideration among administration officials. Treasury only has $20 billion of the first half of the $700 billion in TARP funds remaining at its disposal, after injecting capital into banks, and bailing out AIG and the GSEs. For his part, Paulson has not indicated whether he intends to request the remaining $350 billion approved for TARP before President-elect Barack Obama takes office in January — but he did hint at not wanting to use all of the funds in his remarks Monday. “As we consider potential new TARP programs, we must also maintain flexibility and firepower for this administration and the next, to address new challenges as they arise,” he said.() Write to Paul Jackson at paul.jackson@housingwire.com. Disclosure: The author held no relevant investment positions when this story was published. Indirect holdings may exist via mutual fund investments. HW reporters and writers follow a strict disclosure policy, the first in the mortgage trade.