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.
Government fix: Uncle Sam buys mortgages
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.
Wall Street's plan: Freddie, Fannie to the rescue
In brief: Like the Dodd and Frank plans, a Bank of America proposal calls for buying up troubled mortgages, modifying them to make them affordable, and repackaging them for sale in secondary markets. The difference: Freddie Mac and Fannie Mae, two government sponsored enterprises, would buy the troubled loans.
A similar plan from Credit Suisse would refinance the troubled loans with FHA-insured mortgages. These would be private transactions backed by insurance administered by the FHA. Borrowers would pay for the insurance
The argument: This approach creates both affordability and liquidity. Giving the loans government backing would encourage private lenders to issue these loans and make getting a mortgage easier.
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: Lenders and many consumer and community activist groups support the banks' ideas. Free-market advocates generally like them because they encourage the market to work independently of the government.
Who's against it: The Bush administration, which so far is trying keep the government in advisory or support roles.
Taxpayer price tag: No cost to taxpayers has been discussed, but the Bank of America plan would involve the same kind of seed money - $10 billion to $20 billion - as the Dodd and Frank plans.
While the Credit Suisse proposal wouldn't require an initial investment, it would transfer risk from private lenders to the government, which would mean that taxpayers may have to bear some costs of defaults.
Status: No congressional bill with these provisions has been written yet.
Community funds: Fix neighborhoods
In brief: The Foreclosure Prevention Act of 2008, a bill that is before Congress, calls for states and towns to use community development funds - administered by the Treasury Department and usually used to boost lending in underserved cities and neighborhoods - to buy foreclosed properties, rehab them and sell or rent them.
The argument: It's important to reduce the impact of vacant, distressed properties on surrounding neighborhoods in order to stabilize property values.
Who backs it: The bill was introduced by Senate Democrats and is backed by community and consumer advocates, as well as the representatives of cities hit hard by foreclosures such as Detroit and Cleveland.
Who's against it: Republicans blocked a Senate vote on Thursday that would have helped the bill pass quickly. Only one Republican, Sen. Gordon Smith of Oregon, voted to consider the bill. The community development fund, however, was not singled out for criticism.
Taxpayer price tag: $4 billion in development funds.
Status: Likely to be enacted as part of a larger bill, according Jaret Seiberg, financial services analyst for policy research firm Stanford Group.
State-issued bonds: Tax-exempt solution
In brief: This idea would allow housing finance agencies, which are state chartered organizations created to help low- to moderate-income home buyers get mortgages, to issue tax-exempt bonds to help troubled home owners refinance mortgages.
Under current regulations, these bonds can only be used to finance below-market-rate mortgages for first-time home buyers. The plan would also expand the dollar amount of bonds that the state agencies could sell by $10 billion over the next three years.
The argument: Home owners struggling with high-cost mortgages could refinance into low-interest-rate loans through this program. Lenders would get their principal back and borrowers would lower their monthly payments.
Who backs it: Practically everybody, including the Republicans in Congress, as well as Democrats and the Bush Administration, have come out in favor of this proposal.
Who's against it: The states have given this proposal a lukewarm reception. Many already sell as many of the bonds as they can, according to a spokesman for Rep. Frank, so increasing the loan limits would have little impact.
Taxpayer price tag: This plan should be self-sustaining, but the federal government will take a revenue hit because the bonds are tax-free.
Status: This has a good chance to pass as part of the Foreclosure Prevention Act of 2008, or if it is attached to another economic stimulus bill, said Seiberg.
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