Investors could sell up to $15 billion of troubled mortgages to the government under a plan key House members are discussing to bolster the U.S. housing market.
The tentative plan would allow the government to purchase up to 1 million mortgages over five years in an effort to help struggling borrowers avoid foreclosure and financial markets avoid more credit-related losses. The loans would be bought by the Federal Housing Administration, a Depression-era agency that insures loans made to borrowers with poor credit.
The effort shows that the housing crisis has evolved to the point where government officials are considering bailing out large groups of borrowers and Wall Street investors — something that seemed anathema to Democrats and Republicans all last year. Still, many lawmakers and the Bush administration have been leery of proposals that would transfer risks to U.S. taxpayers.