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WASHINGTON — Federal banking regulators are negotiating with lenders to restructure high-interest mortgage loans made to home buyers with poor credit.

The effort by the Office of Thrift Supervision is aimed at softening the impact of the housing market's slowdown and bolsters the argument of lawmakers who say mortgage reforms may not be needed.

While it may also result in accounting charges on quarterly earnings reports of public companies with mortgage lending units later this year, it could limit any broad economic damage from the risky mortgage practices of the past few years.

Experts say it could also save lenders money in the long run because it costs less to refinance a loan than to foreclose on a house that might not easily sell.

OTS is reacting to a nationwide decline in the pace of home sales and prices compared to last year and a surge in foreclosures that has investors worried the housing market's troubles might spread to the broader economy.

American International Group Inc. disclosed last week that it took a $128 million charge in the first quarter for higher-priced, or subprime, mortgages issued by a bank it owns.

The New York-based insurer declined to specify whether the charge would refinance loans or cover foreclosure costs. The charge was related to "ongoing discussions" with the OTS about troubled mortgage loans issued by Delaware-based AIG Federal Savings Bank, said Chris Winans, an AIG spokesman.

Banking regulators "are seeking to have lenders assist certain nonprime borrowers to remain in their homes. ... Our discussions have centered on that and related issues," said Winans.

An $128 million charge subtracted from AIG's $4 billion first-quarter profit is no big deal. However, similar charges could be significant for lenders that get most of their profit from mortgages.

Kevin Petrasic, an OTS spokesman, declined to detail which — or how many — companies are involved in talks with the agency, which regulates lenders, including subsidiaries of two of the biggest subprime lenders: Washington Mutual Inc. and Countrywide Financial Corp.

"Each situation is really going to be evaluated on its own merits," said Petrasic, who also declined to comment on AIG's disclosure. "We are working with other institutions that have big subprime lending programs ... to make sure that they have a handle on their exposure" to loan defaults.

Other federal banking regulators declined to comment on the OTS' effort, other than to refer to public statements in which they've encouraged lenders to restructure troubled loans if possible.

Lenders have plenty of incentive to refinance at-risk home loans, experts say.

When it comes to fixing the problem, "I don't think it's going to be led by the federal bank regulators," said Paul Miller, an analyst who follows mortgage lenders for Friedman, Billings, Ramsey & Co. "It's going to be led by the market, and people that don't want to lose money ... it's them just trying to be practical about the situation."

For example, the Federal Reserve estimates that it costs a bank $50,000 to foreclose on a home, and houses sold at foreclosure auctions fetch well below appraised values.

In March, the Fed and the other four federal agencies that regulate banks, thrifts and credit unions proposed guidelines that call for caution when lenders make subprime mortgage loans and strict evaluations of a borrower's ability to repay.

If adopted, the guidelines could result in fewer borrowers qualifying for subprime loans. The Fed plans a June 14 hearing on ways to curb abusive lending practices.