Housing rescue: What you need to know

There are so many plans being floated to stem the subprime crisis and avert foreclosures, it's hard to keep track. A cheat sheet on the major proposals.

In brief: The government buys at-risk mortgages from lenders at steep discounts, restructures the loans to reduce payments and resells the loans in secondary markets. Investors in mortgage-backed securities take a loss, but get most of their investment back. Borrowers get refinanced mortgages.

One variation of the plan, proposed by Sen. Chris Dodd, D-Conn., would establish a new agency, modeled after the depression-era Home Ownership Loan Corporation, to buy loans. A similar idea from Rep. Barney Frank, D-Mass., would use an existing entity such as the Federal Housing Administration to do buy loans.

The argument: It would rescue many home owners from foreclosure by taking them out of high-interest rate loans and putting them into affordable fixed-rate ones.

The plan would jump-start the market for mortgages by establishing a true market value for the securities backed by these loans. Then investors would start buying the securities again, creating liquidity and making it easier for borrowers to get a mortgage.

Who backs it: The idea has support from both progressives, like the Center for American Progress, and conservatives like the American Enterprise Institute.

Who's against it: The Bush administration has so far only put its support behind the Hope Now initiative, which calls for lenders to voluntarily rework at-risk loans without using government funds.

"I'm not interested in bailing out investors, lenders and speculators," Treasury Secretary Henry Paulson said last week. "I'm focused on solutions targeted at struggling homeowners who want to keep their homes."

Taxpayer price tag: Seed funding of between $10 billion and $20 billion, much of which could be recovered if the plans self-fund.

Status: Legislation has not been introduced, although Dodd is still actively pursuing it. It will be difficult to win Republican support for the plan.
NEXT: Wall Street's plan: Freddie, Fannie to the rescue