The Federal Housing Administration is planning to loosen some of the requirements of FHASecure—a centerpiece of the Bush administration's plan to stem the tide of foreclosures—after criticism that the program has not helped enough borrowers.

The Department of Housing and Urban Development, which oversees the FHA, has circulated several internal proposals that would relax the program's requirements to make more borrowers eligible for refinancing, a source close to HUD said.

Currently, FHASecure can be used only to refinance adjustable-rate mortgages whose payments have reset; to qualify, a borrower must have been current on the ARM for six months before the reset.

The proposals, which are expected to be announced in the next two months, include expanding the eligibility requirements to include ARM borrowers who fell behind even before their loans reset, as well as borrowers with fixed-rate mortgages, the source said.

Rod Dubitsky, a managing director of fixed-income research and structured products at Credit Suisse Securities LLC, said the FHASecure eligibility criteria are so stringent that only 6% of a total of $136 billion of ARMs that have already reset have been eligible.

"The FHASecure program has been a failure for the most part because the box is too small," Mr. Dubitsky said. "It's the only program out there that will refinance borrowers who have negative equity, and it isn't working."

In a study circulated at its annual conference in Las Vegas last month, the American Securitization Forum said FHASecure in its current form could help only 44,000 subprime borrowers, or just 5% of those who are more than two months behind on payments. Expanding the program to cover delinquent borrowers with fixed-rate loans would help 607,000 troubled homeowners, or roughly 68% of severe delinquencies, the trade group said.

When FHASecure was introduced in August, President Bush said it would help roughly 240,000 families who were delinquent but had made timely mortgage payments before their loans reset to higher rates.

So far the program has helped just 1,487 delinquent borrowers, according to Bill Glavin, a special assistant to FHA Commissioner Brian Montgomery.

Analysts have criticized HUD for inflating the volume of borrowers who have been approved for refinancing under FHASecure.

"There is some additional information that makes us wonder whether the FHASecure volumes are as high as HUD disclosed," Mr. Dubitsky wrote in a report published in December.

Mr. Glavin acknowledged that an additional 91,615 nondelinquent borrowers had been included in the FHASecure totals even though they actually qualified for other FHA programs.

When HUD said in December that FHASecure was "helping tens of thousands of families keep their homes," it "really meant anybody who had a conventional loan" and refinanced into an FHA one, not just those who fit the parameters of FHASecure, Mr. Glavin said.

"When we announced the program, we focused on the fact that it was for delinquent borrowers," he said. "When we got so many calls from people who weren't delinquent yet, we felt that we had to clarify that they indeed could refinance into FHA, and we think many of them were going to be in the same boat as the delinquent borrowers."

So far FHASecure has received 5,638 applications from delinquent borrowers and 229,597 applications from current borrowers, Mr. Glavin said.

The $168 billion economic stimulus package that President Bush signed last week could help the FHASecure program "take off," he said, because it temporarily increased the loan limits on the FHA (as well as those for Fannie Mae and Freddie Mac) to a maximum of $729,750.

Brian Chappelle, a partner at Potomac Partners, a Washington, consulting firm to the mortgage industry, said the new loan limits would boost the FHA's market share considerably, to as high as 25% this year, versus 3% in 2006.

Of course, the loan-limit increases in the stimulus package expire at yearend. FHA reform bills passed by the House and Senate would raise the agency's loan limits permanently, but differences between the bills still need to be worked out before it can be signed into law.

Still, Mr. Chappelle said, even if the FHA's loan limits revert to their previous levels, its market share gains will stick because of several factors—including Fannie Mae and Freddie Mac significantly tightening underwriting to exclude FICO scores below 680, and other changes that have "taken all the friction" out of the FHA process.

"Once the new mortgage limits kick in, it will snowball into an avalanche," Mr. Chappelle said.