Nov. 5 (Bloomberg) -- Prices on the most expensive houses have yet to reach bottom because there’s limited political support for helping the wealthy, according to Pacific Investment Management Co.

“It’s very, very popular to help the median and below in terms of the mortgage market, but the high end, there’s just not a lot of sympathy,” said Scott Simon, Pimco’s mortgage-bond chief. “‘Oh yeah, that guy bought a $2 million house. We should bail him out.’ That’s just not a thought.”

The U.S. government is helping the lower end of the market, which has bottomed, by providing first-time homebuyer credits and helping to keep mortgage rates low, Simon said in a Bloomberg Radio interview. Banks try to find ways to avoid qualifying buyers of higher-end homes for loans and charge “nasty fees” even if the client pays 30 percent upfront, he said.

“You hope that over time, that the banks start to look at it and say, ‘you know what, we’re making this guy put 40 percent down and we can get a 6 percent yield, that’s a good thing,” said Simon, whose Newport Beach, California-based company manages the world’s largest bond fund. “You’re not there at this point but you hope that will be the case.”

Statistics portraying housing prices as rising are misleading because U.S. efforts to reduce foreclosures are distorting the figures by temporarily limiting sales of seized homes, Simon said in a separate interview on Nov. 3. The slump in overall prices is unlikely to end before mid-2010, he said.

Jump in Index

An S&P/Case-Shiller index for 20 metropolitan areas showed values rising 4.8 percent in the four months through August after a record 33 percent drop from its July 2006 peak.

Distressed sales fell to 29 percent of existing-home transactions in September, from more than half in March, as loan servicers assessed borrowers for the federal Making Home Affordable mortgage-modification program and dealt with state- law changes such as a California foreclosure moratorium, according to National Association of Realtors data.

To contact the reporters on this story: Ken Prewitt in New York at kprewitt@bloomberg.net; Bryan Keogh in New York at bkeogh4@bloomberg.net

Last Updated: November 5, 2009 14:00 EST