It was a critical plan to jump-start the economy.

President Obama pledged at the beginning of his term to boost the nation’s crippled housing market and help as many as 9 million homeowners avoid losing their homes to foreclosure.

Nearly three years later, it hasn’t worked out. Obama has spent just $2.4 billion of the $50 billion he promised. The initiatives he announced have helped 1.7 million people. Housing prices remain near a crisis low. Millions of people are deeply indebted, owing more than their properties are worth, and many have lost their homes to foreclosure or are likely to do so. Economists increasingly say that, as a result, Americans are too scared to spend money, depriving the economy of its traditional engine of growth.

The Obama effort fell short in part because the president and his senior advisers, after a series of internal debates, decided against more dramatic actions to help homeowners, worried that they would pose risks for taxpayers and the economy, according to numerous current and former officials. They consistently unveiled programs that underperformed, did little to reduce mortgage debts owed by ordinary Americans and rejected a get-tough approach with banks.

Doing more to address the housing crisis may be crucial not only for an economy flirting with another recession but also for a president running for reelection.

After watching their homes’ values collapse in recent years, a quarter of all homeowners are “underwater,” owing more than their homes are worth. The president’s housing policy has caused a rift with political allies, such as black and Hispanic groups, whose members have been disproportionately hurt by the crisis.

On Monday, Obama is set to travel to the foreclosure capital of the nation, Nevada, where most borrowers are underwater. While there, he will meet with homeowners and push for passage of his jobs legislation, which includes money to rehabilitate hard-hit communities, and mention a program to be unveiled as soon as Monday that will reduce monthly payments for some underwater borrowers.

But Peter Orszag, a former senior White House economic adviser, said the administration has underestimated how much the nation’s massive mortgage debts would weigh the economy down after the financial crisis.

“A major policy error has been to put too little weight on the long, hard slog following a financial slump,” he said. “That leads you to being much less bold with housing.”

Not that there were easy answers. The administration faced the worst housing crisis since the Great Depression. Spending large amounts of taxpayer money to bail out some homeowners — but not necessarily their neighbors — carried huge political risks and faced opposition in Congress.

In this context, some senior officials say they could not have been much more aggressive.

“We tried to operate at the frontier of what was possible and have continuously expanded and refined our programs in an attempt to reach as many homeowners as possible,” said Treasury Secretary Timothy F. Geithner. “We do not believe that there were feasible alternatives available to us within our authority that were better.”

Obama has rarely spoken publicly about his frustrations with the housing crisis, but in a private meeting with his advisers at the White House in December, his concerns boiled over. The president opened the meeting by saying how he had received letters from homeowners warning about problems with his housing programs. He pointed out that he had been assured by his advisers that banks would be able to step up, according to two people who attended.

But at the meeting, he said he was now frustrated to learn, by way of a conclusive new federal review, that banks were not providing required relief to many borrowers.

“He was clearly disappointed,” said one participant in the meeting, “to realize the problem was worse than he thought.”

Obama’s early challenge

After his election, Obama confronted an economy in free fall, fast-rising unemployment, and a national landscape of underwater borrowers who were trapped in their homes and facing potential foreclosure.

The incoming president tried to tackle the problems in the overall economy with a nearly $800 billion economic growth plan. But Democrats and many economists also called for a specific strategy to help borrowers.

This story of the administration’s response to the housing crisis is based on interviews with more than 40 former and current administration officials and others familiar with housing policy, some of whom spoke on the condition of anonymity to discuss confidential conversations.

Obama promised to spend $50 billion to $100 billion of the $350 billion remaining in the Troubled Assets Relief Program, or TARP — the giant pool of money that had been used to bail out banks in the months before he came to office — to provide aid to homeowners: Main Street, not Wall Street.

Obama’s top advisers faced difficult questions about how to spend the money. None favored using taxpayer money simply to wipe out all the bad debt. That would have required one of two things: handing out up to $700 billion to more than 10 million Americans so they could pay off part of their loans, or asking Congress to force banks, which had just narrowly escaped collapse, to tell borrowers they did not have to pay back their whole debt, which would lead to more financial losses for the firms.

Still, Shaun Donovan, secretary of housing and urban development, argued that debt reduction had an important role to play in healing the economy given the depth of the crisis. “It was of a scale that we had not seen before, and that clearly required extraordinary response,” Donovan said in a recent interview.

Donovan pressed for large payments to banks to cover part of the cost of reducing the debts of underwater borrowers. Owing less, homeowners would be able to afford their mortgages, the best outcome for borrower and bank alike.

But the president’s inner circle of economic counselors — Geithner and White House economic advisers Lawrence H. Summers and Austan Goolsbee — did not favor a big program of debt reduction.

“We made that choice because we thought [reducing debt] would be dramatically more expensive for the American taxpayer, harder to justify, create much greater risk of unfairness,” Geithner said later before a congressional panel.

The advisers also worried about the problem of “moral hazard,” when forgiving debts could encourage borrowers not to pay back loans.

Rather than targeting debt, the administration focused its efforts on making monthly mortgage payments more affordable — for example, paying banks to lower the interest rates on loans. At the end of the day, homeowners would still have as much debt.

Even with this less-dramatic approach, Obama’s economic advisers worried about spending too much taxpayer money to help borrowers who still might not pay back their loans. So they excluded large categories of borrowers, including those who could not provide extensive documentation of a steady income.

They allocated $50 billion — at the low end of what they had pledged to use — to the plan, called the Home Affordable Modification Program, or HAMP.

Donovan argued it was crucial to require banks that had received bailouts to take part in HAMP, to ensure aid was offered to eligible homeowners. Others argued they could get banks to participate only if it were a voluntary program — and that view prevailed.

Days before the program’s unveiling, David Moffett, the chief executive of housing finance giant Freddie Mac, arrived at the White House with a last-minute warning: Freddie’s analysts had concluded that the proposals were unlikely to help the millions Obama hoped. But, he recalled, the White House didn’t want to hear it.

“They were a little outraged,” Moffett said, adding that he was told, “We need a strong set of numbers.”

On Feb. 18, a day after Obama signed the stimulus bill, he flew to Arizona and rolled out his housing strategy, pledging to “give millions of families resigned to financial ruin a chance to rebuild.”

Geithner’s concerns

With the housing crisis so intertwined with the financial crisis and recession, Geith­ner came to play one of the administration’s most prominent roles in overseeing and formulating its housing policies. But the secretary did not seem to embrace all aspects of this role.

Geithner met periodically with housing groups at the Treasury Department, but when his communications advisers raised the idea of him holding more public homeowner events at housing counseling centers or similar locations, Geithner said he did not want to spend his time on purely symbolic gestures.

Generally, the Treasury secretary did not regard direct homeowner aid as the best use of taxpayer dollars. He favored expanding the economy by spending money on construction projects or programs to keep teachers and other workers employed, which would help the housing market. In meetings, Geithner would tell the president that if he suddenly had $100 billion more to spend, he would never advise spending it on housing.

Geithner, who was also the point man for stabilizing the financial markets, worried that some steps to help homeowners could pose risks to the financial system, causing more harm than good.

In 2009, for example, Obama officially supported a bill in Congress that would have made it easier for homeowners to obtain mortgage relief in court — a “stick” that would pressure banks to generously reduce homeowner payments.

Behind the scenes, Geithner had grave concerns that if courts could change the terms of mortgage loans after the fact, banks would be less likely to lend, reducing the availability of credit in the financial system.

Ultimately, political advisers decided the bill was unlikely to overcome the opposition of banks, Obama did not fight for it, and the bill died. There would be no stick.

In the summer of 2009, Obama’s team started to get warnings from community groups that banks were foreclosing even when people were eligible for aid.

The president heard alarm bells in the often-emotional letters people wrote him. His top economic advisers would remind him that even if the programs were working perfectly, some homeowners would not get relief.

But it eventually became clear the administration’s housing rescue was falling woefully short. While HAMP had aided fewer than 70,000 people in 2009, for instance, 2.5 million received foreclosure notices.

Nine months after the first warnings, the administration adopted a more aggressive stance, taking new steps to stop banks from foreclosing on borrowers while they were in the process of seeking help. It also announced a new program to give money to states to help homeowners.

A debate unfolded at the White House about whether to try to reduce the debts of underwater borrowers, which could increase their confidence and free them to spend more, or to sell their homes and seek jobs elsewhere.

Obama sought to strike a difficult balance, as he often did.

“A lot of his concerns and questions were about trying to figure out how we could do more on housing,” said Michael Barr, a former assistant Treasury secretary, “while also being mindful of the costs and risks, and making sure our approach was fair to taxpayers and homeowners who were not going to directly be getting helped.”

But in reality, the programs were off-balance. Although advisers intended to address the debt problem, they set up programs in ways that were likely to limit their success — for example, asking banks to reduce debts without offering much taxpayer money to help cover the cost.

To date, administration programs have permanently reduced the debt of just one tenth of 1 percent of underwater borrowers.

Fannie and Freddie

One of Obama’s crucial levers for helping homeowners was the taxpayer-backed mortgage giants Fannie Mae and Freddie Mac, which own or insure half of all home loans. But his administration largely squandered the chance to use them.

Since the financial crisis in 2008, the firms have received more than $130 billion in taxpayer dollars to offset losses, becoming poster boys for bailouts. When Obama came to office, the Federal Housing Finance Agency, the regulator that controls Fannie and Freddie, was open to doing virtually anything to help homeowners, including reducing debts.

“My argument at the time was, with Fannie and Freddie sitting on 30 million mortgages, anything you did to right the mortgage market would actually save money,” said former FHFA director James Lockhart, a George W. Bush-era appointee.

But the administration was not willing to go that far. And when it finally decided to try some limited debt reduction, it was too late.

Lockhart stepped down for a job in the private sector. His deputy, Edward DeMarco, who took over as acting director, had spent much of his career at the Government Accountability Office and the Treasury Department, trying to rein in Fannie and Freddie. Now he had the chance to do it.

In a confidential letter to Donovan this year, DeMarco wrote that he would not allow the companies to reduce debts, because the firms would incur “immediate losses . . . on otherwise performing loans.” But he added that he would reconsider “should the Administration identify a source of funds to cover some portion of the costs.”

With the problem of underwater borrowers holding back the economic recovery so significantly, senior officials sought to use the unspent housing funds to do just that. But it was, again, too late. By now, a bailout-weary Congress had banned new uses of the funds.

More-recent efforts

Last fall, state investigations revealed widespread foreclosure abuses by banks and their lawyers. A federal audit confirmed that banks were not offering required relief to some eligible homeowners, potentially causing unnecessary foreclosures. The administration’s efforts to get banks to comply had not succeeded.

In December at the White House, Obama gathered top aides and expressed his frustration.

“He pushed the whole group to go further and be more aggressive,” Donovan said.

Over the following months, the administration began working with state officials on a $25 billion settlement with banks over foreclosure abuses that would be paid in part through debt reduction — a process that’s nearing completion.

Other programs have shown unexpected success in reducing monthly payments, though not reducing debt. The Federal Housing Administration, an agency that helps first-time home buyers, has aided about 1 million borrowers, while the private sector has assisted about 2 million borrowers.

All told, estimates indicate that when all current programs have run their course, the administration will have spent a total of about $13 billion on housing programs.

Still, at least 5 million more foreclosures are estimated in coming years — and perhaps many more. This summer at the White House, Obama offered a rare acknowledgment that his response to the housing crisis had fallen short.

Asked what mistakes he had made in handling the recession and what he would do differently, he said: “We had to revamp housing several times to try and help people stay in their homes and try to start lifting home values up. Of all the things we’ve done, that’s probably been the area that’s been most stubborn in us trying to solve the problem.”