Banks are likely to begin signing contracts as soon as this month that would let second mortgages and other home equity debt be reworked under a government-subsidized program, a Treasury Department official said last week.

Contracts may be signed this month or in early August, said the Treasury official, who asked not to be identified discussing private talks.

On April 28, when provisions to expand President Obama's "Home Affordable" plan were announced, officials said the second-lien program would be up and running in about a month.

The home-equity program offers government funds to servicers, lenders and borrowers when debt is forgiven or reworked to cut payments.

It is meant to further aid consumers and housing markets, while responding to concern among mortgage-bond investors that banking companies such as JPMorgan Chase & Co. and Wells Fargo & Co. would modify first the mortgages they service, but do not own, to improve the quality of their untouched second-lien portfolios.

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