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, HUD Director for Single Family Asset Management Vance T. Morris told the panel.

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 to make it easier for borrowers who have seen their home values plummet to take advantage of current low mortgage rates.

But so far, officials have indicated the modification program would focus on borrowers who have seen their mortgage payments balloon due to adjustable-rate mortgages. They haven't announced steps to help borrowers who can't 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, officials from the Office of the Comptroller of the Currency, the Office of Thrift Supervision and the Federal Housing Finance Agency testified. Industry executives representing Citigroup Inc. (C), Bank of America Corp. (BAC), Ocwen Financial Corp. (OCN), Wells Fargo & Co. (WFC) and JPMorgan Chase & Co. (JPM) comprised a second slate of witnesses.

The company executives touted their efforts to modify loans, but the government officials noted that such actions haven't kept pace with steadily climbing delinquencies and foreclosure actions.

JPMorgan Chase has prevented 330,000 foreclosures through loan modifications and expects to avert 650,000 foreclosures by the end of 2010, according to Molly Sheehan, an official in the bank's home-lending division.

Sheehan said the bank would soon announce new measures to prevent foreclosures, including an automatic five-year rate freeze for certain homeowners with subprime adjustable-rate mortgages scheduled to reset for the first time. The bank will also offer pre-approved modifications for certain borrowers with loans backed by Fannie Mae (FNM) or Freddie Mac (FRE) who meet the criteria of the mortgage giants' Streamlined Modification Program.

Bank of America completed 230,000 loan modifications in 2008, nearly double the number in 2007, the bank's managing director of loan administration loss mitigation, Michael Gross, said. Bank of America, which purchased subprime lender Countrywide Financial last year, announced a joint effort with several state attorneys general last fall to provide loan modifications for Countrywide borrowers.

Gross said Bank of America estimates that 25% to 40% of its loan modifications have re-defaulted. In his testimony, FHFA chief economist Patrick J. Lawler said re-default rates of individually modified loans have historically ranged around 25% to 30%, far lower than the more-than-50%-rate cited by the OCC. However, he noted that a lack of common definitions makes it difficult to compare re-default rates.

Lawler said the administration plan to allow homeowners who owe more than 80% of the value of their homes to refinance more easily wouldn't increase the risk to Fannie and Freddie.

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 companies' government charters prevent them from buying mortgages with loan-to-value ratios above 80% unless the borrower obtains credit enhancement.

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 "cram down," or a reduction in the principal amount or a change in the interest rate, 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.

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