State officials are floating a $400 million plan designed to jump-start the economy by helping more Utahns get loans to buy the growing number of homes languishing on the market, especially those sitting vacant.

But whether such an effort, funded by selling taxable bonds, can be pulled off in today's recessionary climate remains to be seen. And some worry that it would do little to whittle away at the glut of unsold homes along the Wasatch Front, most of which are in higher price ranges that most Utah families can't afford based on their incomes.

Despite these challenges, Bill Erickson, president of Utah Housing Corp., said his agency will attempt to sell taxable bonds to generate cash that would provide mortgage loans to moderate-income Utahns who may be struggling to qualify for mortgages under newer, tighter lending standards.

The bonds would be issued by the agency, not the state, meaning no taxpayer money would be involved. The ensuing loans would be insured by the federal government, guaranteeing that bondholders would be repaid.

Erickson is overseeing the newly created Housing Action Coalition organized by Gov. Jon Huntsman Jr. It aims to boost the real estate market and overall economy, while trying to help Utah avoid the problem of mounting vacant properties that is plaguing neighboring states.

"The last thing we want is a (glut) of foreclosed homes that fall into disrepair," he said.

Erickson said the goal of the $400 million mortgage fund would be to provide financing with low down payments or no down payments. Borrowers would be subject to yet-to-be-determined income and purchase price limits, with the latter likely being houses costing around $300,000.

"We don't want to finance monster homes on the benches," he said.

But that's where rub comes, according to several industry professionals. They contend that much of the inventory of unsold houses are properties priced at $350,000 or more -- a price range out of reach of most moderate-income families.

As much as 80 percent of the estimated 2,600 new homes sitting vacant in Salt Lake, Utah, Davis, Tooele and Weber counties are priced in that range, said Jason Eldredge of real estate consulting company NewReach.

"I'm sure a program like this will help the situation some, but there are just so many homes out there that are priced higher than what a moderate-income family can afford."

Jillinda Bowers, president of the Salt Lake Board of Realtors, said she is generally supportive of any plan that would help the state's ailing real estate market.

But like Eldredge, she's not convinced that a loan program offering low down payments or no down payments, would go very far in paring down the inventory of houses for sale along the Wasatch Front.

She said that three-quarters of the existing homes being sold today are prices at $300,000 or less, and usually much less. Many Utah families lack the incomes -- and particularly the financing -- to grab houses in higher price ranges.

Plus, she's not too crazy about the idea of the state promoting low-down payment mortgages.

"In the past we made it too easy to get people into homes with no money down, which made it easier for them to walk away from their obligations," she said. "I still think people have to have a decent down payment."

Erickson said Utah Housing Corp. has successfully offered low-down payment loans for years, pointing out that the agency has low delinquency and foreclosure rates.

He said part of that has to do with "responsible" underwriting criteria and the fact that the agency provides only fixed-rate loans, not the adjustable-rate mortgages that have led to so many foreclosures nationally.

"We only lend to people who have credit scores of 680 and above, and they have to have a history of paying their bills and steady employment," he said. "We would incorporate all these underwriting standards into the program we're proposing here."

But Erickson acknowledges that the $400 million mortgage fund isn't a certainty, given today's economic uncertainty.

"We hope to be able to assemble buyers or investors in those bonds and get the program up and going as soon as possible. Yet ... it's far more difficult than ever to sell bonds at a reasonable rate so we can offer a reasonably priced mortgage."

The agency already has started a $100 million "Dream Saver" program designed to help Utahns convert adjustable-rate and other problematic mortgages to 30-year, fixed-rate loans.

Erickson said that even if the new program helps get a few hundred of the thousands vacant homes off the market, it would be a positive for the state.

"It could possibly stir a little activity."

lesley@sltrib.com