WASHINGTON — Before the Treasury Department has even announced its plan for lowering mortgage rates, a growing chorus claims it is too narrow to work.

The Treasury is expected within weeks to announce a plan to use the government-sponsored enterprises to lower mortgage rates to 4.5% for any new-home purchase.

But by excluding refinancings, critics claim the Treasury would be doing little to help existing homeowners struggling to make mortgage payments.

"It still ignores the basic problem. There are a lot of people losing their homes and unable to pay their mortgages," said V. Gerard Comizio, a partner at Paul, Hastings, Janofsky & Walker LLP. "You can keep throwing money until doomsday, but people keep losing their jobs and can't pay their credit card bills. That's going to continue a downward spiral."

Under the still-developing plan, Fannie Mae and Freddie Mac would buy securities that finance newly issued mortgages and encourage lenders to set the interest rate at 4.5%. The basic idea would be to stabilize the housing market by bringing in new borrowers.

The plan is substantially similar to one pushed by the National Association of Realtors, which has been aggressively pushing the idea in newspaper ads and in meetings with members of Congress.

Jerry Giovaniello, senior vice president of government affairs for the Realtor group, said it makes sense to limit the plan to new-home purchases.

"It would have a huge impact on stabilizing housing prices and getting people to buy who want to buy," he said.

He said the program would complement a plan pushed by Federal Deposit Insurance Corp. Chairman Sheila Bair to spur loan modifications on existing loans.

But Treasury Secretary Henry Paulson has been resistant to Ms. Bair's idea because it would drain funds from the Troubled Asset Relief Program.

Analysts said focusing on interest rates for new mortgages and ignoring distressed ones would be a mistake.

"There would be a certain irony for it to be just new mortgages given that so much of the talk in Washington is on distressed homeowners," said Fred Cannon, an analyst at KBW Inc.'s Keefe, Bruyette & Woods Inc.

But some observers said the plan could have an indirect effect on stressed homeowners.

"If it helps stabilize existing prices it makes the decision to modify than to foreclose an easier decision," said Laurence Platt, a partner at K&L Gates.

Keith Leggett, an economist for the American Bankers Association, said the plan would help boost overall house values. "By focusing on new mortgages, what you will precipitate is the lower interest rate will be capitalized in the value of the house, and that will help stop this spiral with regard to downward housing values," he said.

But Brian Chappelle, a partner at Potomac Partners, said the Treasury cannot leave out refinancing in the plan.

"That does nothing to address the fundamental problem of people underwater on their mortgages and the constricting of the economy," he said. "I think it has to do both" — refinancings and new mortgages. Until the housing problem is resolved, "the economy is not going to recover. For that you have to have house prices stabilizing and deal with foreclosures."

Lawmakers also expressed frustration that Mr. Paulson has not done enough to help struggling homeowners. House Financial Services Committee Chairman Barney Frank said the Treasury chief is willfully ignoring two of lawmakers' key goals of the bailout — to increase lending and reduce foreclosures. The Massachusetts Democrat threatened more conditions on the Treasury if Mr. Paulson asks for the second $350 billion installment from the bailout package.

"At the very least he'd have to agree that some of that money was going to be used for foreclosure relief," he told reporters on Thursday.

In a speech to the Consumer Federation of America, Rep. Frank charged the Treasury with effectively turning a blind eye to whether banks are actually using Tarp funds to support lending.

"What Treasury has told the banks is, 'We want you to lend more money, but we'll never know whether you did anything,' " he said.

As industry observers spent Thursday picking apart the Treasury's next potential move, Federal Reserve Board Chairman Ben Bernanke was offering suggestions on how current programs to help troubled borrowers might be altered. He said Congress could make the Hope for Homeowners program, which calls on the Federal Housing Administration to do more refinancings for troubled borrowers, more attractive by lowering the insurance premiums lenders pay.

"Congress might consider making the terms of H4H loans more attractive by reducing the up-front insurance premium paid by the lender, currently set in at 3% of the principal value, as well as the annual premium paid by the borrower, currently set at 1.5%," he said. "The Congress might also grant the FHA the flexibility to tailor these premiums to individual risk characteristics rather than forcing the FHA to charge the same premium to all borrowers."

The Fed chief also noted the FDIC's plan to modify loans., saying it could include more of a role for the government.

"For example, a servicers could initiate a modification and bear the costs of reducing the mortgage payment to 38% of income, after which the government could bear a portion of the incremental cost of reducing the mortgage payments beyond the 38%, say to 31%, of income," he said. "This approach would increase the incentive of servicers to be aggressive in reducing monthly payments, which would improve the prospects for sustainability."

He acknowledged that such a plan would put "greater operational burden on the government" but said it "could leverage existing modification frameworks, such as the FDIC/IndyMac and Hope Now streamlined protocols, and in this respect would build on, rather than crowd out, private-sector initiatives."

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