Washington  - The United States launched an effort Wednesday to help homeowners pay off their mortgages, hoping to stabilize a housing market that lies at the centre of the country's deep recession.

President Barack Obama last month announced a 75-billion-dollar plan to help up to 9 million homeowners refinance their mortgages and avoid foreclosure.

With home prices plunging more than 20 per cent in the last year, an industry report Wednesday said that at least 8.3 million people owed more on their mortgages than their property was worth - about one fifth of all US mortgage holders.

Another 2.2 million homeowners will be "underwater" if prices drop another 5 per cent, preventing them from selling the house if they can no longer afford the mortgage payments, according to First American Core Logic.

The US Treasury announced the specifics Wednesday that should allow private lenders to ease the burden on struggling homeowners. Under the plan, the government could subsidize deals reached between lenders and mortgage holders to lower their monthly payments.

The Treasury will also expand refinancing efforts by government- chartered lenders Fannie Mae and Freddie Mac, which together own or guarantee about half of all US mortgages.

The new measures are designed to halt an unprecedented number of foreclosures - more than 3 million in 2008 - that brought the US financial sector to the brink of collapse as firms lost hundreds of billions of dollars in mortgage-related investments.

US home prices have been falling since 2006 as a decade-long housing bubble came to an end. The Federal Reserve in a regional survey said Wednesday that the housing market "remained largely stagnant" in the first two months of the year.

"It is imperative that we continue to move with speed to help make housing more affordable and help arrest the damaging spiral in our housing markets," Treasury Secretary Timothy Geithner said in a statement.

Obama's plan came under fire from some conservatives for potentially rewarding homeowners and speculators who knowingly took on more than they could afford.

According to the new details released by the Treasury, homeowners would have to prove "financial hardship" before getting access to government aid. (dpa)