In Fla. this month, Fannie Mae auctioned off nearly 100 foreclosed properties. In Chicago, Freddie Mac was offering help to homeowners in distress, reports CBS News business correspondent Anthony Mason.
The two troubled mortgage giants seized by the government nearly two years ago now own or guarantee nearly 31 million home loans, 56 percent of all American mortgages, and they're bleeding billions in losses.
"Fixing this system is one of the most consequential and complicated economic policy problems we face as a country," said U.S. Treasury Secretary Timothy Geithner.
The Treasury kicked off the debate over how to fix Fannie and Freddie at a Washington Conference last week. The stakes are huge. Even now Fannie, Freddie and the Federal Housing Authority are propping up the housing market.
"More than nine out of every 10 mortgages originated today are filtered through one of those three institutions," said Mark Fleming, chief economist at CoreLogic.
The government has already pumped nearly $150 billion into both to keep them afloat. Some say taxpayers could end up with a $1 trillion bill.
"Fannie Mae and Freddie Mac are going to incur the losses of our neighbors who default on their mortgages," said Shari Olefson, author of Foreclosure Nation.
Set up by Congress as private companies to expand home ownership, Frannie and Freddie buy up mortgages from lenders so those banks have money to lend again. But they're now holding $210 billion in bad loans. And the government, which always unofficially backed Fannie and Freddie, is stuck with them.
"It goes to the very heart of the American dream," said Olefson. "It really goes to the very heart of what role should government play, if any, in housing."
The Treasury aims to come with a plan for Fannie and Freddie by January, but reforming them will be difficult while the housing market is still so fragile.