By Patrick Rucker

WASHINGTON, June 3 (Reuters) - President Barack Obama's plan to refinance mortgages for as many as 9 million troubled homeowners is off to a slow start due to government bureaucracy and the challenge of unwinding Wall Street's bad mortgage bets, a U.S. housing official said on Wednesday.

Obama announced the housing rescue plan in mid-February but officials are still signing up mortgage finance companies to participate and collecting paperwork from troubled homeowners in search of help, said James Lockhart, director of the Federal Housing Finance Agency.

"Borrowers are required to submit the required documentation, be approved for a modification, and successfully perform under a three-month trial," Lockhart told a congressional panel as he outlined some steps that a troubled borrower might face before getting mortgage relief.

The Obama housing plan goes further than past efforts to aid distressed homeowners because it targets both delinquent borrowers and those who could simply use some financial relief. But officials are still racing to save borrowers.

Lockhart, the chief regulator for housing finance companies Fannie Mae and Freddie Mac, told a U.S. House of Representatives' Financial Services subcommittee that one part of the program that would pay mortgage companies cash to reduce a borrower's payments to 31 percent of their income would not see significant results until "current activities ramp up in late summer."

The Obama administration has tapped Fannie Mae and Freddie Mac to coordinate the bulk of the housing rescue but they have only been able to reach a small faction of troubled borrowers.

Fannie Mae and Freddie Mac control 30.4 million home loans, but they have been able to steer less than 9,000 troubled borrowers towards an emergency sale that avoids foreclosure, Lockhart said. In the first three months of the year, the companies foreclosed on 41,264 properties, he said.

One in every 374 homeowners who carry a mortgage balance -- a record 342,000 households -- received a foreclosure notice in April, the real estate research firm RealtyTrac said last month.