“Hasn’t housing been subsidized enough?”

The Obama administration is hammering out a program to subsidize mortgages in a new front to fight the credit crisis, sources familiar with the plan told Reuters on Thursday, boosting financial markets. In a major break from existing aid programs, the plan under consideration would seek to help homeowners before they fall into arrears on their loans. Current programs only assist borrowers that are already delinquent.

Under the evolving plan, sources said homes would undergo a standardized reappraisal and homeowners would face a uniform eligibility test.... The Treasury Department, which is taking the lead role in financial rescue efforts, did not respond to a request for comment.... [U.S. Treasury Secretary Timothy] Geithner said on Thursday the administration would soon put a housing program in place that uses ‘a mix of incentive and persuasion’ to get mortgage companies to rewrite loans. ‘The key elements of the strategy are going to bring mortgage interest rates down to help avoid the foreclosures that we can reasonably expect to avoid,’ he said.... Officials weighed, but have shelved for now, another plan that would have the government stand behind low-cost mortgages of between 4.0 percent and 4.5 percent, the sources said.