WASHINGTON (MarketWatch) — The Treasury Department’s announcement that it is changing the terms of its four-year-old financial backing for Fannie Mae and Freddie Mac is a boon for mortgage originators, homebuilders and Treasury bonds as it delays reform of the two giant government-seized firms, experts said Friday.

The Federal Housing Administration will need billions of dollars in aid from the U.S. Treasury before the end of the year to fill a financial hole caused by defaults on mortgages it insures, House Financial Services Committee Chairman Spencer Bachus said today.

FHA will propose increases in the premiums it charges to insure mortgages as one solution to its financial problems, Bachus said during a press conference in Washington. Still, that won’t be enough to offset its near term need for cash.

The agency is “burning through” its last $600 million and FHA officials have briefed him that they will need a financial backstop within a month, the Alabama Republican said during a press conference in Washington.

“Because of the number of foreclosures, they’ve indicated they will have to come to the American people and ask for money,” he said.....

A tax break that has long been untouchable could soon be in for some serious scrutiny.

Many home buyers deduct their mortgage interest when assessing their tax bill, a perk that has helped bolster the income of millions of families — and the broader housing market.

But as President Obama and Congress try to hash out a deal to reduce the budget deficit, the mortgage interest deduction will likely be part of the discussion.

Limits on a broad array of deductions could emerge in any budget deal. It is likely that any caps would be structured to aim at high-income households, and would diminish or end the mortgage tax break for many of those taxpayers.....

Even after their financial collapse and massive taxpayer-funded bailout, Fannie Mae and Freddie Mac are still the colossi of the U.S. home-mortgage market. They own or guarantee repayment on more than half of the system's $10 trillion in outstanding mortgage debt. More astonishing, these agencies are making money again -- lots of it -- under tightened government supervision and aided by strengthening home prices. Once their second-quarter numbers are released, they will show that the duo will have returned in dividends about $131 billion of the $187 billion that the government had to infuse into them following their September 2008 seizure.

The recent news from the two has been so encouraging that their delisted common shares are up about 500%; the price of their preferred stock has gained about 200%, as opportunistic hedge and mutual funds wager that the two will survive -- albeit heavily reorganized and privatized -- and eventually offer the kinds of big share payouts that investors reaped from American International Group (ticker: AIG), among other casualties of the financial crisis.

Don't bet on it. There is little appetite in Congress or elsewhere to permit the two government-sponsored enterprises (GSEs) ever again to exploit their federal charters, with the cheaper borrowing costs and implicit government backstop of their obligations, to enrich shareholders and leave the American taxpayers to pick up the pieces when the model blows up. Two legislative proposals have emerged in recent weeks, one in the House and one in the Senate, that call for the agencies' operations to be wound down, their charters revoked, and their remaining assets sold off in the ignominy of a receivership. In any event, it's highly unlikely that the common or preferred shares hold any lasting value.

While the process will take some time, since no final legislation is likely to emerge until after the 2014 midterm elections, what is more probable than Fannie or Freddie's revival is the emergence of a hybrid American mortgage system in which the government has a lesser but continuing role as guarantor. The private sector will play a bigger part, but will also have to assume more risk. One result for prospective homeowners: The rate for a standard mortgage will be higher, possibly a half percentage point or more than under the current system.....