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This is WEEKEND EDITION from NPR News. I'm Scott Simon.

The Obama Administration wants to scale back the federal government's role in the mortgage market. But officials say they'll have to move slowly to avoid causing more trouble for an already weaken home sales environment. Yesterday, the administration suggested three options for replacing the government-run mortgage giants, Fannie Mae and Freddie Mac. All three are likely to result in higher borrowing costs and bigger down payments for would-be homebuyers.

NPR's Scott Horsley reports.

SCOTT HORSLEY: The administration is determined to phase out Fannie and Freddie. The mortgage giants nearly collapsed during the financial crisis and had to be bailed out by taxpayers at a cost of more than $130 billion so far. What the government has not decided is what should replace Fannie and Freddie.

Treasury Secretary Timothy Geithner says whatever role the government ultimately plays in the mortgage market, it will be smaller than it is now.

Secretary TIMOTHY GEITHNER (Department of the Treasury): The way we describe this is, you know, we're all, we're going to drive west. Everybody wants to go west. We sort of know where we're going to go. But somewhere around Salt Lake City we'll make a choice about what mix of ultimate options.

(Soundbite of laughter)

HORSLEY: The administration is offering three possible roadmaps with varying levels of government support for mortgages. The more support, the more widely available mortgages will be. But that also means a greater risk for taxpayers.

President John Courson of the Mortgage Bankers Association says even with the most generous government guarantee now being contemplated, home loans will be harder to come by than in the past.

Mr. JOHN COURSON (President, Mortgage Bankers Association): Even today we're seeing for consumers a tighter credit box, it's more difficult for consumers to get mortgage loans and to qualify. But the other side is we need to get away from an idea that home ownership should be a certain percentage. Homeownership has to be sustainable.

HORSLEY: Administration officials dismiss the charge, leveled by some Republicans, that affordable housing goals were a driving force in Fannie and Freddie's problems. But Geithner acknowledges the U.S. has been too focused on housing; thats one reason the government wants to scale back its role.

Sec. GEITHNER: I think it's absolutely the case that the U.S. government provided too much support for housing. Too strong incentives for investment in housing. We just took that too far.

HORSLEY: While scaling back support for home loans, the administration wants to see more support for rental housing, though it hasn't decided how to go about that.

HUD Secretary Shaun Donovan says too many renters now pay too much of their income to the landlord.

Secretary SHAUN DONOVAN (U.S. Department of Housing and Urban Development): We need to rebalance our national housing policy. We have been too focused on homeownership at the exclusion oftentimes of rental housing.

HORSLEY: None of these changes is likely to come quickly. Thanks to the financial crisis, the federal government now bankrolls nine out of 10 new mortgages. And any sudden drop in support could imperil the housing recovery. Officials say the ultimate phase out of Fannie and Freddie is likely to take between five and seven years.

Scott Horsley, NPR News, Washington.

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