The proposal will be part of a U.S. Treasury Department "white paper" to Congress that lays out three ways of cutting government support of the $10.6 trillion U.S. mortgage market, the officials said.
One proposal favored by some of President Barack Obama's economic advisers, and by many Republicans, would have Washington do nothing to replace Fannie and Freddie and let private markets provide mortgages for most Americans, the officials told The New York Times, Wall Street Journal and other publications.
Another proposal would turn the government into a "guarantor of last resort," stepping in only in times of crisis. And the third would let the government continue backstopping mortgages but less than it does now and not through government-supported entities like Fannie and Freddie.
U.S. Federal Reserve Board Chairman Ben Bernanke said Wednesday Washington should back home loans only as a last resort and only in times of economic stress -- and should explicitly charge for that support, like the Federal Deposit Insurance Corp. charges fees to insure deposits and handle bank failures.
The federal government seized Fannie and Freddie -- the nation's No. 1 and No. 2 mortgage buyers -- Sept. 8, 2008, as losses mounted from bad mortgage loans and investors lost confidence in the pair.
The bailout kept mortgage credit flowing, but also led to $150 billion in losses that taxpayers covered in the takeover.
The two firms, whose loan portfolios are worth roughly $1.5 trillion, are in the process of liquidating their old loans.
Steps to cut the government's role in the mortgage market would likely raise home buyers' borrowing costs, analysts told the Journal. A complete government withdrawal could end the popular 30-year, fixed-rate mortgage in favor of adjustable-rate mortgages.
So any transition would take years and be driven by the pace of the housing market's recovery, the analysts told the Journal.
While Fannie and Freddie wind down, the Obama administration will also propose limiting the size of loans they can buy -- down to $625,500 from the current $729,750 -- and increasing the fees they charge for loan guarantees, officials told the Times and other publications.
Congress set the higher rate in 2008 and it is set to expire in September.