The Obama administration is working on regulatory changes to allow the Federal Housing Administration to assist homeowners faced with "more than just temporary" losses in income, a senior U.S. housing official testified Tuesday to a U.S. House panel.

The Department of Housing and Urban Development is also requesting authority to allow the FHA to buy down balances of troubled mortgage loans, according to written testimony by HUD Director for Single Family Asset Management Vance T. Morris.

The remarks reveal fresh details of the administration's strategy to assist homeowners at risk of foreclosure. President Barack Obama last week unveiled a sweeping plan to spur loan modifications for certain borrowers and make it easier for borrowers who have seen their home values plummet take advantage of current low mortgage rates.

But so far, officials have indicated the modification program would help borrowers who have seen their mortgage payments balloon due to adjustable-rate mortgages. They have not announced steps to help borrowers who cannot afford their payments because they may have lost their jobs, a growing problem due to the economic downturn.

The housing plan targets "working homeowners making a good-faith effort to stay current on their mortgage payments," according to a fact sheet released by the administration. More plan details are scheduled for release on March 4.

Morris testified Tuesday before the Financial Services Committee's housing subcommittee - the latest in a string of hearings in recent months on mortgage servicers' efforts to help troubled borrowers.

In addition to Morris, officials from the Office of the Comptroller of the Currency, the Office of Thrift Supervision and the Federal Housing Finance Agency testified. Industry officials representing Citigroup (C), Bank of America (BAC), Ocwen Financial Corp., Wells Fargo (WFC) and JP Morgan Chase (JPM) comprised a second slate of witnesses.

The government officials offered support for the Obama housing plan.

FHFA chief economist Patrick J. Lawler said the administration plan to allow homeowners who owe more than 80% of the value of their home to refinance more easily would not increase the risk to Fannie Mae (FNM) and Freddie Mac (FRE).

The program, open only to borrowers with mortgages backed by the mortgage giants, would allow people with high loan-to-value mortgages to refinance without purchasing additional mortgage insurance. The firms' government charters prevent them from buying mortgages with loan-to-value ratios above 80% unless the borrower obtains credit enhancement.

In his testimony, Lawler said re-default rates of individually modified loans have historically ranged around 25%-30%, far lower than the more than 50% rate cited by the OCC. However, he noted that that a lack of common definitions makes it difficult to compare re-default rates.

Lawler also noted that the foreclosure problem is concentrated in loans that aren't owned or guaranteed by Fannie Mae and Freddie Mac. The two own or back just 19% of seriously delinquent mortgages, he said, while so-called private-label mortgage-backed securities represent more than 62% of serious delinquencies.

"If we are going to stabilize the housing market, we must address that 62%," he said.

As part of its housing plan, the Obama administration has proposed changes to FHA and Veterans Administration authority to ensure that partial claims are paid to investors in mortgages backed by the agencies in the event of a cramdown by a bankruptcy judge or a voluntary modification by the servicer. The changes are intended to prevent investors from shunning mortgages insured by the agencies and to spur more loan modifications.

Legislation pending before the House would make the statutory changes. The bill, which is set for a vote as soon as Thursday, would also make it easier for mortgage servicers to assign government-insured loans back to the government for modification.

The change would allow them to avoid the costs of buying back loans packaged into Ginnie Mae securities and sold to investors.

Lawler said that programs by the Federal Reserve to buy mortgage-backed securities and debt issued by Fannie and Freddie have reduced mortgage rates. "If confidence is restored and the present large spread to Treasury rates is reduced, mortgage rates could move lower," he said.

Lawler repeated that the government's agreement to pump $200 billion into Fannie and Freddie to keep them solvent amounted to an "effective guarantee" of the firms' debt and mortgage-backed securities.

-Jessica Holzer, Dow Jones Newswires; 202-862-9228; jessica.holzer@dowjones.com