March 29 (Bloomberg) -- President George W. Bush said the government will expand efforts to help homeowners avoid foreclosure as Democrats increase pressure on his administration to reduce unaffordable home-loan payments.

The White House is ``committed to building on'' its program to help borrowers refinance mortgages, Bush said in his weekly radio address today. Officials are weighing measures to ``provide some additional help to some homeowners,'' White House spokesman Tony Fratto said.

Support is growing among policy makers, including Federal Reserve Chairman Ben S. Bernanke, to urge lenders to write down the principal on loans to keep homeowners from abandoning their properties. Bush has so far resisted using government funds or guarantees to stem the surge in mortgage foreclosures.

A plan being considered seeks to tackle underwater loans, or mortgages that are larger than the value of a home, the Washington Post reported today, citing unidentified officials. The Federal Housing Administration would encourage banks to forgive part of the debt and refinance smaller mortgages with backing from the government, the Post said.

``The problems in the housing market are complicated and there is no easy solution,'' Bush said today. ``But by supporting responsible homeowners with wise policies, we'll help them weather a difficult period.''

Developing Ideas

Homeowners would have to agree to stay in their homes, be able to afford the new payments and have lenders who sign off on the changes, the Post said. The proposal was recently submitted to the Office of Management and Budget for review and approval, the Wall Street Journal reported yesterday.

The concept is similar to elements in legislation proposed earlier this month by U.S. Representative Barney Frank, a Massachusetts Democrat and chairman of the House Financial Services Committee.

Policymakers at the Department of Housing and Urban Development, which oversees the Federal Housing Administration, are developing ideas, White House spokesman Fratto said, declining to comment on details. He said the administration isn't ready to ``put forth a proposal right now.''

The Post cited an unidentified official as saying the plan under development won't likely be announced before Bush returns from his trip to Europe next week.

Bush has also urged Congress to pass legislation that would enable the FHA to be more competitive in the mortgage market and help stem the rising number of foreclosures through its mortgage insurance and refinancing operations. House and Senate Democrats have offered competing plans.

FHA Overhaul

``Our priority is still for Congress to pass FHA modernization, something they've neglected to do for nearly two years now,'' Fratto said.

Bush pledged Aug. 31 to help people who have fallen behind on mortgage payments keep their homes through the FHASecure program, which enables homeowners with good credit ratings to refinance into government-insured loans.

Treasury Secretary Henry Paulson also has brokered a series of voluntary accords among lenders to freeze interest rates on subprime loans and place a one-month moratorium on forecloses. The effort emerged from an alliance of banks and finance industry groups Paulson helped create in October called Hope Now to help struggling borrowers modify their loans.

Paulson is also likely to call for the creation of new regulatory agencies with broad powers over lending and investment banking, according to the draft of a study he commissioned that was obtained by Bloomberg News.

Tax Rebates

Bush in his radio address today also said the government is working to ensure that details of the recently approved economic stimulus rebates are well known.

``It's not every day that Americans look forward to hearing from the Internal Revenue Service, but over the past few weeks, many Americans have received a letter from the IRS with some good news,'' Bush said. ``Millions of Americans will soon be receiving tax rebates.''

Many economists are forecasting a recession as employment, retail sales and manufacturing data have deteriorated this year. A Commerce Department report yesterday showed a 0.1 percent increase in purchases following a 0.4 percent gain in January. Spending by American consumers has sustained the economy amid housing's worst downturn in a generation.

To contact the reporter on this story: David Scheer in Washington at dscheer@bloomberg.net.

Last Updated: March 29, 2008 18:28 EDT