President Barack Obama's administration may propose that any government backing of mortgages be funded by fees on mortgage lenders, The Wall Street Journal reported.
The administration has not come up with a final plan for mortgage entities Fannie Mae and Freddie Mac, The Wall Street Journal reported without naming its sources. Still, the consensus is that the mortgage market requires some kind of government guarantee.
Fannie, Freddie and government agencies between them currently back about 90% of new loans.
Officials want the cost of explicit guarantees to be fully offset by mortgage lenders, to prevent the guarantee adding to the federal deficit. Still, levying high fees on the industry could lead to increased borrowing costs.
Last week, Treasury Secretary Timothy Geithner said there was a "strong case" for a federal guarantee but that "the challenge is to make sure that any government guarantee is priced to cover the risk of losses, and structured to minimize taxpayer exposure."
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