Obama's Mortgage Plan

WASHINGTON — The Obama administration wants to shrink the government's role in the mortgage business — a proposal that would remake 70 years of federal policy aimed at encouraging Americans to buy homes.

The Treasury Department rolled out a plan Friday to slowly dissolve Fannie Mae and Freddie Mac, the government-sponsored programs that for decades have purchased mortgages so that more home loans could be made.

Fannie and Freddie own or guarantee about half of all mortgages in the U.S.

But both programs got in big trouble by investing in subprime mortgages and required bailouts during the 2008 financial crisis.

Exactly how far the government's role would be reduced was left to Congress to decide, but all three options the administration presented would create a housing finance system that relies far more on private money.

"Is it a good idea? As long as it keeps the mortgage market open to people," said Michael Haymes, president of ReMax Realty Group in Pittsford. "We need to have the housing market continue to turn around."

Mortgages "would be a little less easy to obtain, and the terms would be a little less attractive," said economist Nigel Gault of IHS Global Insight.

Treasury Secretary Timothy Geithner said that the government would proceed "very carefully" and that its smaller role would be phased in over at least a five-year period.