Interesting potential bailout version. (snipet of the article) Bush's mortgage bailout just might work ....Based on Bush's announcement last week of a new Federal Housing Administration program to help around 80,000 at-risk homeowners obtain debt relief -- an effort modest in scope but stunning in its reversal of prior policy -- it's clear he will go for the latter in the interest of helping his party avoid a wipeout next November. Bove notes that a precedent for a widespread mortgage-assistance program lies in the Emergency Home Finance Act of 1970, which established these mechanisms to help challenged households: ---Banks would originate mortgage loans with 1% interest rates. ---The Federal Housing Administration and Department of Veterans Affairs would insure the loans against loss. ---The Government National Mortgage Association, aka Ginnie Mae, would buy the mortgages at par from the banks, allowing the banks to make a small profit. ---Ginnie Mae, taking a sizable loss, would then sell these loans to Fannie Mae (FNM, news, msgs) and Freddie Mac (FRE, news, msgs) at a discount so that the buyers would earn reasonable yields. ---Fannie and Freddie would fund these purchases with low-cost, government-guaranteed debt. As a result, Bove speculates, tens of thousands of at-risk homeowners would get to keep their homes. Ginnie Mae would lose tens of billions of dollars that would be repaid by banks and taxpayers at a pace and in a manner similar to the Iraq reconstruction effort. Fannie Mae and Freddie Mac would end up with huge increases in the sizes of their portfolios. And, most importantly, the nationwide housing collapse would disappear as an election theme for Democrats.