FACTBOX: Impact of rescue legislation for U.S. housing

WASHINGTON (Reuters) - This week the U.S. Senate is expected to pass legislation to create a $300 billion government fund that would guarantee failing mortgages before they hit foreclosure.

Under the plan, the Federal Housing Administration would guarantee shaky home loans and so let mortgage companies and investors shed housing assets that have sunk in value. Benefits of the program are expected to be limited, though, by red tape.

Lenders would have to agree to write off a large share of the home's present value and comply with other cumbersome rules in order to qualify for the home loan guarantee.

Below are some details of the program and the impact it is expected to have:

Although the Senate bill would permit the government to refinance up to $300 billion in failing loans, the plan would only reach about $68 billion of the $2 trillion of the riskiest home loan debt heading toward foreclosure, the Congressional Budget Office said.

About 11 million borrowers who bought homes with risky subprime or Alt-A loans will face foreclosure between 2009 and 2011, but the Senate bill will save only about 400,000 of them, the nonpartisan report concludes.

The CBO study found that government refinance efforts will be stymied by competing interests among lenders who hold different stakes in the mortgages. All such interests must agree to the voluntary program before refinancing. "Because first- and second-lien holders may have conflicting financial incentives, the opportunities for joint consent can be limited," the report states.

Research from JPMorgan guesses that the housing rescue plans contemplated by Congress "will not provide any meaningful reduction in mortgage losses" and only prevent 2 percent of troubled loans from failing.

(Reporting by Patrick Rucker; Editing by Jan Paschal)