The Obama administration is launching yet another high-profile campaign to shore up the housing market -- and with it, the economy -- by making it easier for some struggling homeowners to refinance underwater mortgage loans at today's ultra-low interest rates.

The federal government's new rules will encourage borrowers to secure new loans no matter how much value their homes have lost during the nation's housing crisis, with the hitch that they can't have missed any mortgage payments for the last six months.

The plan could help 1 million to 2 million people get significantly lower monthly payments in hopes of stabilizing the real estate market. On top of that, it would boost the economy by putting about $2,500 more in a typical homeowner's pocket each year, administration officials said.

But given the huge problems that continue to plague the real estate market, the plan is less a solution to the foreclosure crisis than a firebreak to try to prevent things from getting worse, analysts said. In particular, the program won't help the 3.5 million borrowers who are seriously delinquent on their loans or are already in default.

"It's a step forward, but what we need is a leap forward," said John Taylor, president of the National Community Reinvestment Coalition, an association of organizations that promote access to affordable housing.

The Obama administration has struggled to find a fix for the housing crisis. A program to lure banks to permanently modify mortgages has fallen so far short of its goals that Republicans have pushed to kill it. And the refinancing program, designed to help millions of homeowners, has been revised several times in hopes of making it more effective.

Separately, Federal Reserve officials have hinted in recent days that they could launch another program to buy up mortgage-backed bonds in an effort to pull home loan rates lower.

"They keep trying to find something that's going to work and so far they haven't found the silver bullet. Arguably there's no silver bullet," Bert Ely, an independent banking analyst, said of the Obama administration's attempts to help the housing market.

"More moderate approaches haven't worked, so now they're trying something that frankly is more radical," he said.

The plan could help borrowers such as James Perry, 36, an editor for a television show who owns two properties that are underwater, meaning he owes more on the mortgages than the homes are worth.

Perry bought a condominium in Santa Monica in 2005, near the height of the market, and rented it out after he couldn't sell it. Its value has dropped about 6%, he said. He owns a larger home in Tarzana for his growing family, and its value has plunged nearly 20%.

Refinancing both properties could save him about $400 a month, Perry said. "I am not a rich guy, so $400 a month will help," he said. "I have two kids. I would like to put that toward some college savings, and it would just make for a little more breathing room. We are not in any sort of trouble, but an extra $400 a month will obviously make us happier."

Perry said he tried refinancing the Santa Monica home about a year ago, paying about $500 for the appraisal, but the home's value didn't allow him to qualify for a low rate. Given that experience, he didn't bother trying to refinance the Tarzana home.

The plan announced Monday amounts to a sweeping overhaul of the 2½-year-old Home Affordable Refinance Program, easing rules and reducing fees to allow many more homeowners potentially to take advantage of historically low mortgage rates. Through August, the program had helped 894,000 homeowners refinance.

The revisions include lifting a ceiling that barred participation by borrowers who owed more than 125% of the value of their homes, and using a controversial modeling method to replace costly appraisals that are among the fees that have kept some homeowners from refinancing.

"These are important steps that will help more homeowners refinance at lower rates, save consumers money and help get folks spending again," President Obama said in touting the changes during an appearance in Las Vegas on Monday.

Nevada, California and Florida are among the states hit hardest by the subprime housing bubble crash.

About 14.6 million mortgages nationwide were underwater at the end of the first quarter, about 29% of the nearly 51 million residential mortgages nationwide, according to Moody's Analytics and Equifax. The rate was higher in California, where about 2.1 million mortgages are underwater, a third of the state's 6.3 million mortgages.

Perry's refinancing problems were typical, mortgage experts said. Even though HARP allows underwater homes to qualify, banks usually won't refinance a loan in which the borrower owed more than 105% of the value.

Speaking at Fordham University Monday, New York Fed President William Dudley called on lawmakers to support the troubled housing market.

NEW YORK (CNNMoney) -- A top Federal Reserve official is pushing for an "urgent effort" to prop up the housing market, and support the overall U.S. economy.

Speaking at Fordham University Monday, New York Fed President William Dudley called for policymakers to make it easier for homeowners to refinance at lower mortgage rates and prop up home prices.

"If prospective homeowners no longer fear that prices could decline further they will be more willing to enter the market to take advantage of reduced prices and lower financing costs, and existing homeowners will feel more confident about increasing their spending," he said. "A vicious cycle could be replaced by a virtuous one, in which stabilization in house prices supports spending, growth and jobs."

Dudley described the problems in the housing sector as one of the greatest challenges still facing U.S. economic growth. Amid lower home prices, homeowners are spending less, he said. Meanwhile, tough credit standards and the large supply offoreclosed homes (which threaten a further decline in prices) are discouraging would-be buyers from entering the market.

On Monday, the government unveiled a plan to help struggling homeowners. The new rules will allow homeowners who owe more than 125% of the market value of their homes to get new loans.

Dudley's comments are the latest in a campaign by several of his Fed colleagues, pushing for more economic aid from the Fed.

Last Thursday, Fed Governor Daniel Tarullo outright called for the Fed to purchase more mortgage-backed securities as a way to bring mortgage rates even lower and prop up the housing market.

And on Friday, Janet Yellen, second in command to Fed chairman Ben Bernanke, said another round of asset purchases could be necessary to boost U.S. economic growth.

Since the recession, the Fed has launched two rounds of asset purchases known as quantitative easing and QE2. Most recently, the Fed initiated a program called Operation Twist, which shifts its balance sheet from short-term to longer-term bonds in an effort to lower long-term interest rates.

On Monday, Dudley did not advocate for another such program, but he did say it could be a possibility.

"Depending on how the world evolves, we could potentially do more in that direction" he said.

He reiterated strong calls from the Fed, for lawmakers in Washington to quickly find a solution to the country's long-term debt problems.

"Our nation needs to get its public finances in order," he said, noting that states and local governments are likely to continue cutting jobs and spending as federal aid to states peters out. He also urged lawmakers to avoid making excessive short-term cuts or increasing taxes, both of which he said could harm the recovery.  

The Obama administration and a US housing regulator Monday unveiled a revamped home-loan refinancing program, designed to aid hundreds of thousands of Americans whose homes have fallen in value in the wake of the housing bust.

The plan is the latest federal effort to tackle a Key impediment to the US economy, a stagnant housing market caused in the main by elevated numbers of homeowners who owe more than their homes are worth.

It came after several Obama administration efforts to stabilize the housing market failed in an economy with stubbornly high unemployment.

The overhaul will let borrowers refinance their mortgages regardless of how far their home prices have plunged in any given market, eliminating a previous restriction that shut out homeowners who owed more than 125% of their homes’ current value.

While some experts and Democrats had called for a more far-reaching refinancing program, administration officials said they aimed to do what was practical without passing legislation through a divided US Congress.

“Any mortgage is a contract, and the government cannot come in and override contracts and force refinancing of every mortgage,” said Housing and Urban Development Secretary Shaun Donovan. “What we have done is to take the steps that we can take today.”

Officials estimated that the changes will help families save $2,500 or more, on average, annually. “It’s the equivalent of a substantial tax cut for these families,” Mr. Donovan said.

The plan is designed to streamline the refinancing process by eliminating appraisals and extensive underwriting requirements for most borrowers, as long as homeowners are current on their mortgage payments.

The refinancing program is open to homeowners whose mortgages are owned or guaranteed by Fannie Mae (OB:FNMA) or Freddie Mac (OB:FMCC), the 2 government- controlled mortgage Giants whose rescue 3 yrs ago has cost taxpayers US$141-B to date.

Regulators are revamping a program rolled out in Y 2009, the Home Affordable Refinance Program, or HARP, which lets borrowers with homes whose values have dropped to refinance. So far, only 894,000 borrowers have used it, of which just 70,000 are significantly underwater.

The FHFA said the changes could at least double the number of homeowners enrolled. Analysts at Barclays Capital, however, estimated that between 1.9 and 3.1 million homeowners could be eligible for help.

Officials said they are trying to encourage Americans to shorten the terms of their mortgages, by replacing 30-yr fixed-rate mortgages with shorter 15 or 20-yr terms in which the principal is paid off faster.

Fannie, Freddie and the Federal Housing Finance Agency have agreed to waive fees for borrowers who refinance into loans with shorter terms, such as a 15 yr mortgage. They will also reduce fees, but not eliminate them entirely, for everyone else.

Edward DeMarco, acting director of the Federal Housing Finance Agency, said that, by moving to shorter loans, borrowers can regain equity in their homes. ” Americans all across the country have been doing this calculus for a number of months now,” he said.

The program could open up refinancing to borrowers in Nevada, Arizona, Florida and California who are paying above-market interest rates and who are deeply ” underwater,” owing more than their houses are worth.

Refinanced loans for those deeply underwater borrowers cannot be sold into traditional pools of mortgage-backed securities issued by Fannie and Freddie.

Officials will take time to develop a way to sell these bonds, which is not likely to happen until early next year.

Mr. DeMarco said investors in mortgage-backed securities sold by Fannie and Freddie are likely to be interested in bonds containing those loans.

President Barack Obama is expected to present the program in Las Vegas later Monday.

Speaking to reporters Monday, Gene Sperling, director of the National Economic Council, said the White House considered moving the changes as legislation but decided to work in concert with the regulator and the mortgage industry to launch the program.

The HARP program will be extended through Y 2013, beyond its current expiration date of June 2012. The program is limited to loans that Fannie and Freddie guaranteed before June 2009.

Loans that have been refinanced in the past 2.5 yrs, including those through HARP, are not eligible to refinance under the program.

Under changes announced Monday, banks will be shielded from the risk that they will have to buy back HARP mortgages.

They only will have to verify that borrowers have made their last 6 payments, have no more than 1 missed payment in the last year and have a job or another source of income.

Fannie and Freddie will issue final pricing information and other technical details by November 15, and some banks have said they could begin taking applications under the new program by as soon as December 1.

Mortgage insurers have also agreed to make it much easier to transfer existing mortgage-insurance coverage, which has blocked many borrowers from refinancing.