U.S. plans third redo of key housing aid effort

U.S. housing officials are rewriting the terms of a $300 billion aid program that was expected to reach 400,000 distressed mortgage holders but has only helped a handful, a senior official said on Monday.

At issue is the Hope for Homeowners program that was conceived last summer to help ease struggling borrowers out of costly loans and into mortgages that carry a government guarantee.

That program began in October, but has been bedeviled by cumbersome terms and costly red tape that forced the government to try to rejig it last year. Hope for Homeowner terms were loosened in mid-November, but still failed to win either popular support or industry backing.

So the government is starting over.

"We are completely revamping," said David Stevens, the program's chief.

As a senior administrator at the Department of Housing and Urban Development, Stevens is in charge of overseeing the rescue effort and managing the mortgage securities that will be a byproduct of the program.

"Once you create the securitization structure, you need to make sure there is a market for the security and that it will trade," Stevens told Reuters in the wings of a mortgage conference.

A modified program should be in place by early September that will correct the flaws of Hope for Homeowners, officials said.