Failure to deliver more government aid to households could precipitate a wave of mortgage defaults and evictions, Federal Reserve Chair Jerome Powell said in a fresh warning amid a continued deadlock in Congress over another coronavirus relief package.

While households are spending now, perhaps using what's left of money from the $2.3 trillion package passed by Congress in March, "the risk is they will go through that money, ultimately, and have to cut back on spending and maybe lose their home or their lease," Powell said in testimony before the Senate Banking Committee.

"That is the downside risk of no further action. We don't see much of that yet, but it could well be out there in the not-too-distant future," Powell said in the last of three hearings in which he testified before Congress this week. 

Meanwhile, hundreds of billions of dollars in unused funds from a $2.3 trillion coronavirus aid package could be reallocated to help U.S. households and businesses, Powell and Treasury Secretary Steven Mnuchin said.

About $200 billion in money allocated to the Treasury to backstop U.S. central bank loans remains uncommitted, Powell and Mnuchin said in the hearing. 

Mnuchin also pointed to the $130 billion left in the now-expired Paycheck Protection Program to help small businesses, funds he said would his first priority to get approval from Congress to tap and send to needy firms.

In addition, Powell, in response to a question, said most of the $75 billion allocated to the Fed's largely untapped Main Street Lending Program remains unused.

The focus on reallocating those sums has emerged as Congress has remained deadlocked over providing new fiscal relief that Powell said could make the difference between continued recovery and a much slower economic slog.

Asked by Republican Senator Mike Crapo, the committee chair, what the best use of the unused funds might be, Powell said it could be spent to help small businesses and households.

Prospects for new fiscal aid are dim less than six weeks before the Nov. 3 presidential election.