BEIJING, Feb. 27 (Xinhuanet) -- Members of the U.S. House of Representatives are discussing a plan that would allow investors to sell up to 15 billion U.S. dollars of troubled mortgages to the Federal Housing Administration, a Depression-era government agency that insures loans made to borrowers with poor credit.

    The tentative plan would allow the government to purchase up to 1 million mortgages over five years in an effort to help struggling borrowers avoid foreclosure and financial markets avoid more credit-related losses.

    The effort shows the housing crisis has evolved to the point where government officials are considering bailing out large groups of borrowers and Wall Street investors. But many lawmakers and the Bush administration have been leery of proposals that would transfer risks to U.S. taxpayers.

    The plan was outlined Tuesday in a House Financial Services Committee document listing priorities for the year. It is similar to one unveiled last month by Sen. Christopher Dodd, D-Conn., chairman of the Senate Banking Committee, who proposed creating a new federal corporation to purchase distressed loans and help struggling homeowners refinance.

    Proponents of the new House plan say it should be palatable to critics of any perceived bailout because both investors and borrowers would take a loss. Banks and investors who hold those mortgages — often in complex mortgage securities — would be required to write-down their value, while homeowners would have their loans refinanced into more affordable ones.

    "If the economy continues to be a problem, you'll probably have more people jumping onto this," said Rep. Scott Garrett, R-N.J., a member of the financial services panel. Garrett is skeptical of the idea, saying it would reward investors and borrowers who made bad decisions and merely provide incentive for others to do so in the future.

    The plan comes as the banking industry has advanced several proposals on Capitol Hill that would allow the government to take on the risk of some bad loans, potentially limiting the scope of losses for Wall Street.

    There is precedent for such in effort: In the 1930s, the government created the Home Owners' Loan Corp. to help borrowers avoid foreclosure. The corporation made more than 1 million loans to refinance troubled mortgages, and in 1937 owned 14 percent of all outstanding U.S. mortgages, according to testimony last month by Alex Pollock a resident fellow at the American Enterprise Institute.

    (Agencies)