Efforts to avert foreclosures are being complicated by the large number of subprime borrowers who took out second mortgages so they could afford the downpayments on their homes, industry executives say.

George W. Bush, the US president, signed a bill last month providing $300bn to help distressed homeowners refinance into cheaper mortgages backed by the Federal Housing Administration. In exchange for agreeing to a loss on the initial loan, primary lenders are guaranteed a minimum pay-out while the second mortgage would be wiped out.