In early February, Congress gave beleaguered mortgage borrowers a rare cause for celebration. As part of the economic stimulus package, it passed rules intended to make it easier and less expensive for people to take out hefty loans in the nation’s costliest housing markets.

Economists and legislators said that helping tens of thousands of borrowers take out billions of dollars in new loans could stanch the bleeding in the housing market, spur spending and reduce the pain of a likely recession.

Instead, the effort to make it easier to get jumbo mortgages — loans over $417,000 — has yielded frustration and disillusionment.

Since the rules took effect April 1, many prospective borrowers and their mortgage brokers say the new loans are either not available or the rates are far higher than they expected. Relief, they say, has been replaced by grief.

The program “is so much of a failure that it’s really unbelievable,” said Daniel Shlufman, president of FCMC Mortgage Corp. in Clifton, N.J. Shlufman likened Congress’ effort to “coming up with a vaccine to a terrible disease, and then not giving it to people, or making it too expensive.”

Under the new rules, a sizable number of jumbo loans would be treated by the mortgage industry the same as smaller conventional loans. This change — raising the ceiling for loans backed by government-sponsored housing finance agencies to nearly $730,000 in the nation’s costliest locations — was intended to bring rates down for more borrowers and stimulate the lending that is needed to get the economy moving again.

The goal of making most of these jumbo loans accessible was aimed not at helping subprime borrowers, those people with spotty credit histories. Rather, it was meant for borrowers with good credit and ample down payments, but who wanted to buy a house or refinance a home loan in the costliest housing markets, like New York; San Francisco; Anchorage, Alaska; Baltimore; Edwards, Colo.; and Jackson, Wyo.

In such markets, a two-bedroom home can easily cost more than $1 million.

But the real concern over this program’s failure goes beyond people seeking million-dollar homes. The danger, economists say, is in how a wave of foreclosures and rising inventory of homes for sale will deepen and prolong the economic downturn started by the subprime mortgage crisis.

Robert Edelstein, a professor at the Haas School of Business at the University of California, Berkeley, said that it was essential to a healthy economy that jumbo borrowers in these upper tier markets are able to get financing. “There could be a contagion,” he said, as the subprime woes “move up the chain.”

“The housing market has to stabilize, “ he said. “And in these markets, large loans are needed because the values are big.”

Members of Congress and people in the mortgage-backed securities industry remain optimistic about the new rules. They say it is too soon to declare success or failure. Relief, they insist, remains around the corner. They argue that the credit market that fuels home ownership must be given time to adapt to rule changes that affect billions in potential loans.

Earlier last month, Freddie Mac, one of the two main government-chartered companies (along with Fannie Mae) that helps the housing market by purchasing loans in bulk from lenders, said that over the next year, it would buy up to $15 billion of the jumbo loans. That change and others that may follow, optimists argue, could lead to more loans and bring down interest rates.

“We’re getting some benefit but not as much as I’d hoped,” said Rep. Barney Frank, D-Mass., chairman of the House Financial Services Committee. “That will change shortly,” he said an interview. “I am confident that within a month or less, it will be fully operational.”

Freddie Mac estimates the new rules could encourage $40 billion or more in loans by year’s end, which it estimates could finance new mortgages or mortgage refinancings for 50,000 or more borrowers.

Despite an eager consumer base, it appears few such loans have been made, according to John Bancroft, executive editor of Inside Mortgage Finance. He expects activity to pick up as the market adjusts to the rules. “It’s going to take some time,” he said.

But time may run out at the end of the year, when the system is supposed to revert to the old rules. Not surprisingly, lenders and their secondary investors are hesitant about changing their business for a short time.

And rates have not dropped — at least not to the degree that many borrowers and mortgage brokers had expected. In some cases, “conforming” loans, so designated because they conform to the government-sponsored rules, are a full percentage point below the newly conforming jumbo loans intended to be covered by the new law.

“It’s a complete joke,” said Jose Lemus, president of Brymus Capital, a mortgage brokerage firm in Santa Ana, Calif. He said a buyer in Southern California looking to borrow $417,000 would pay an interest rate of 5.75 percent, while someone borrowing slightly more for a conforming jumbo loan would pay an interest rate of 6.99 percent.

For a jumbo loan that is not conforming, the rate could be as low as 7.35 percent for someone with excellent credit, Lemus said, but the rate for someone with average credit could be as high as 9 percent. “It’s getting harder by the day,” Lemus said.

Because the rates have not fallen as Lemus and his customers had hoped, he has not processed a single loan under the new rules.

How mortgages matched up in ’07

In 2007, around 14 percent of new loans were jumbos, compared with 8 percent for subprime and 48 percent for traditional conforming loans, according to Inside Mortgage Finance, a newsletter that tracks mortgage activity.