By Margaret Chadbourn
CHICAGO (Reuters) - A senior Republican in the House of Representatives said on Monday it may be appropriate for the government to maintain some role in supporting the housing market in the future, but only a limited one.
"As we consider where our mortgage market is in the future, there may be a role for the government," Representative Spencer Bachus, the chairman of the House Financial Services Committee, told the Mortgage Bankers Association.
Still, Bachus, who has helped lead a Republican effort to eliminate taxpayer support for mortgage finance giants Fannie Mae and Freddie Mac, said it was important to reduce the government's footprint in housing finance.
"We should be stepping out of the way and allowing the private market to take over with as limited a number of regulations and restrictions as possible," he said.
Democrats and Republicans alike agree the U.S. system of housing finance needs to be revamped. They disagree on the extent to which government support should be maintained.
Mortgage industry executives said in later sessions at the conference an overhaul of the government's role in the mortgage market will happen, just not in the near future.
"I don't expect we'll get any real insights into that anytime soon," said Michael Heid, Wells Fargo & Co's home mortgage president.
Currently, through Fannie Mae, Freddie Mac and the Federal Housing Administration, the government backs about 90 percent of all new mortgages. The level of future government support will be determined by legislative changes that could take years to enact.
In February, the Obama administration outlined three potential approaches to revamping housing finance, ranging from privatizing the system to limiting government-guaranteed mortgages to low and moderate income borrowers.
On Thursday, U.S. Treasury Secretary Timothy Geithner said the administration was considering a new set of legislative ideas to try to jump-start debate on shrinking the government's role.
"I don't know what will be possible in terms of legislating in the next 18 months or so. We would like to get that process moving," he said without offering a timeline on how quickly the administration might move.
Policymakers are wary of moving too quickly to withdraw government support given the housing sector's extreme weakness. The administration has been pushing Fannie Mae and Freddie Mac's regulator to take steps to make it easier for struggling borrowers to refinance their mortgages.
Bachus took note of the weakness of the U.S. housing market and said he would not interfere with new policies under consideration, nor would he use obstructionist politics if there was an increased momentum to fix the housing market.
"I will not let ideology detract of any reasonable attempt of the government to play a positive role," he said. "We aren't going to get out of this until the housing market recovers," Bachus added, referring to the sluggishness of the overall economy.
(Reporting by Margaret Chadbourn; Additional reporting by Joe Rauch; editing by Andrew Hay)