Housing rescue: What you need to know

In brief: Lenders led by Bank of America have proposed that Freddie Mac and Fannie Mae buy troubled mortgages at prices equivalent to what lenders would get back if they go through the entire foreclosure process. Then Freddie and Fannie -- publicly-owned, government sponsored enterprises - would modify the loans to make them affordable and repackage them for sale in secondary markets.

Another lender, Credit Suisse, would have the government involved by refinancing the troubled loans with FHA-insured mortgages. These are transactions between borrowers and private lenders guaranteed by government-backed insurance.

The argument: The plan would reinvigorate frozen credit markets. Giving the loans government backing would encourage private lenders to issue more loans and make obtaining a mortgage easier for borrowers.

Who supports this: Lenders, of course, but some free-market advocates like the plans because they encourage the market to work with only a secondary role played by the government.

Who is against it: Community advocates warn it could become a bailout for lenders. Many of the most at-risk mortgages may recover only about 50% of their principal if they went through the foreclosure process. Investors in these mortgages then might prevail upon the government to "sweeten the price," said Seiberg, with taxpayers putting up some cash to offset those big losses.

Taxpayer price tag: No cost to taxpayers has been discussed, but the Bank of America plan would involve government seed money, perhaps $10 billion to $20 billion. The Credit Suisse proposal would transfer some risk from private lenders to the government, introducing the possibility that taxpayers would have to bear the costs of defaults.

NEXT: Thrift plan: Postponed payoff