NEW YORK (CNNMoney.com) -- The government is expected to announce soon that it will devote up to $50 billion to directly address the source of the financial crisis: bad mortgages and millions of homeowners at risk of foreclosure.

White House spokesman Tony Fratto said on Thursday that "no decisions" have been made on "a number of housing proposals" that the administration has been reviewing "for some time."

But three administration officials indicated to CNN that the new program would be designed to prevent foreclosures by having lenders reduce delinquent borrowers' mortgage payments to affordable levels. In exchange the government would guarantee some percentage of each loan to backstop lenders if borrowers re-default on modified mortgages.

Help up to 3 million Homeowners

The plan could help up to 3 million homeowners, although that number is not firm, according to the administration sources.

If it comes to fruition, the government's new loan program could trump the efforts of the Hope for Homeowners program put into place on Oct. 1 by the Federal Housing Administration.

Lawmakers spent months fighting over the legislation that created the FHA program before enacting it in July. Lenders may be more likely to participate in the latest government plan if it imposes less stringent requirements.

Hope for Homeowners program

TheHomeowners program offers full government backing

for lenders that agree to write down a mortgage to 90% of a home's appraised value. But the loss to lenders can be greater than 10% because many troubled homeowners are also "under water" - meaning they owe more on their home than its current market value. So to participate in Hope for Homeowners, lenders in many cases would have to lock in a sizeable loss. The plan being considered likely would not require such a strict writedown. Instead, it might require that the new payment for the borrower be affordable.

Monthly payments can be made affordable by, among other ways, reducing the interest rate for a period of time or extending the term of the loan. Typically one way to determine affordability is to consider a delinquent borrower's debt-to-income ratio. At IndyMac, which was taken over by the FDIC this summer, loans are being modified so that borrowers' new mortgage payment does not exceed 38% of their pre-tax income.

The new government plan could offer lenders a way to reduce their losses on troubled loans, according to Jaret Seiberg, a financial services analyst at the Stanford Group, a policy research firm. "Effectively, this is a cheaper alternative to the FHA rescue program that Congress enacted," Seiberg wrote in a note Thursday. "Lenders would have to modify the loan to make it affordable, but no one has discussed imposing the FHA rescue haircut requirement."

Funding for the potential initiative would come from the $700 billion financial rescue package passed by lawmakers in early October. To date, most of the money from that package has been devoted to getting the credit markets going again.