Mortgage lenders are beginning to offer a new type of mortgage associated with President Bush’s stimulus package that is intended to offer potential buyers lower rates, and so far the program has not been effective, brokers claim. Chase Lending Bank and Wells Fargo have begun implementing fees and guidelines for mortgages of up to $729,750 that will now be guaranteed by the quasi-government home loan agencies Freddie Mac and Fannie Mae, while other large lenders, including CitiMortgage and Washington Mutual, are expected to follow suit in the days ahead.

It had been that Freddie Mac and Fannie Mae could guarantee loans only up to $417,000, but the stimulus package ups the guarantee limits to provide relief for more homeowners. The going rate on the new, so-called super-conforming loans is about 6.6%, compared with 5.9% on mortgages that are less than $417,000.

These super-conforming loans come with several restrictions: They are limited to condominium and single-family homeowners, shutting out buyers of coops, which make up a majority of New York housing stock; there is a limited window for applications before the program expires at the end of the year, and there are limits on cash-out refinancing, a common practice where buyers refinance their mortgages for more than they currently owe on the loan and pocket the difference.

With so many restrictions, less than 10% of New Yorkers will be eligible for the lower-rate loans, the owner of the Manhattan Mortgage Co., Melissa Cohn, said.

The limits on cash-out refinancing are especially burdensome, brokers say. While Fannie Mae prohibits most cash-out refinancing, Freddie Mac will allow it up to $100,000, and only to refinance no more than 75% of the home’s value. To borrow at this 75% benchmark, the buyer also must have a credit score of at least 720. Manhattan attorney Ariyike Diggs, for example, had been planning to cash out on her $400,000 mortgage by taking out a lower-interest $440,000 loan — but her mortgage broker was unable to seal the deal because her credit score was 10 points shy of Freddie Mac’s cutoff, according to a principal at mortgage firm Commodore Mortgage Group, Richard Bouchner.

In addition to the lending caveats, the lenders themselves are tacking on additional fees. Chase Home Lending, for instance, has announced it will add between a 2% and 3% fee on broker commissions that will likely be passed on to the borrowers in the form of higher rates.

“The new loan limits were supposed to save a lot of borrowers,” Mr. Bouchner said. “Now that the banks have allowed Freddie and Fannie’s guidelines to trickle down into their system, we’re seeing that this isn’t the life preserver that homebuyers had expected.” While there are caveats, and the rates are not as cheap as the smaller mortgages that Freddie Mac and Fannie Mae guarantee, they are lower than mortgages that are not backed by these agencies. The going rate for a mortgage of about $700,000 is more than 8%, brokers say.

Still, mortgage experts had hoped the new program would help insulate the New York housing market from a slowdown. With home prices in New York remaining high — the median price for condos is $1.35 million, compared with the national median home price of just $195,900, according to the National Association of Realtors — they say this incentive was especially important.

Now, the new mortgage program is “essentially useless,” the senior vice president of Preferred Empire Mortgage Co., Jeffrey Appel, said. “If you’re not getting that much of a break on your rates and if there’s no cash-out option, then you have to wonder, what’s the point?”