An Obama administration summit of housing industry leaders next week may yield clues on the future of Fannie Mae and Freddie Mac , the two mortgage heavyweights that so far have sucked up close to $150 billion in taxpayer bailout funds.

The administration has vowed to produce a plan by January to change the role the two government-controlled firms play in supporting the housing market. The conference on Tuesday is aimed at soliciting views from top industry officials on how to the companies should be restructured.

The Bush administration seized Fannie Mae and Freddie Mac in September 2008 as the financial crisis was reaching fever pitch. The two companies were heavily saddled with mortgage losses after the implosion of the U.S. housing market.

A consensus has since emerged that their former status as shareholder-owned but congressionally chartered entities, which fostered a belief in financial markets that the government would not let them fail, should not be resurrected.

Still, the debate over how much support the government should provide to foster homeownership is likely to prove messy given the diversity of views along the political spectrum. Any decision on what to do could take years to resolve.

Treasury Secretary Timothy Geithner has said there is a good case for the government to continue playing a role in housing finance. But he and other administration officials have been careful not to say what form that might take and how much support is needed.

Michael Barr, the Treasury Department's assistant secretary for financial institutions, said on Tuesday the implicit guarantees of the past are not going to return.

If we decide we want to subsidize the housing sector we are going to need to decide to do that explicitly, and people are going to have to pay for it. I think that would be a fundamental change, Barr said.

The administration has used the two companies and the Federal Housing Administration as key props to support housing and the economy.

Indeed, markets have been rife with speculation the administration would force them to write down loans for struggling homeowners who owe more than their house is worth. The administration, however, has said no policy shift is on the way.

DEBATING THE OPTIONS

The public discussion with industry leaders, including Wells Fargo Home Mortgage Co-President Michael Heid, Bank of America Home Loans President Barbara Desoer and Moody's Economy.com chief economist Mark Zandi, will provide an opportunity for the administration to flesh out its thinking, although the topic is so sensitive officials are likely to pull back the veil only slightly.

Bill Gross, co-founder of bond-trading firm Pacific Investment Management Co, and Lewis Ranieri, the former Salomon Brothers trader who developed the model for the private mortgage-backed securities market that was behind a rapid expansion of credit for U.S. homeowners, are also on the list of panelists.

The two companies theoretically could be turned into wholly owned government agencies that buy and hold pools of MBS, which would return to the original, post-Depression model for Fannie Mae.

But analysts say such a move is highly unlikely because it would dramatically increase the government's role and make a dire U.S. budget deficit situation even worse.

Many Republicans, who have blasted the administration for not tackling Fannie Mae and Freddie Mac in a sweeping overhaul of financial regulation, want to fully privatize the firms. That also seems unlikely as government support for housing is seen by many as akin to a birthright.

That leaves some sort of convoluted solution as the likely end game, according to Dean Baker, co-director of the left-leaning Center for Economic and Policy Research.

That's what the banks want, Baker said.

The Mortgage Bankers Association has proposed a system in which risk-based fees on a class of mortgage-backed securities would be charged in exchange for an explicit government guarantee ensuring investors do not suffer losses.

Taking place less than three months before lawmakers face voters upset at funding bailouts, the conference provides an opportunity for the administration to rebut charges of inaction, as the sweeping Wall Street overhaul did not include Fannie Mae and Freddie Mac.

Republicans hope to capture that voter anger and paint incumbent Democrats as responsible for the hundreds of billions of taxpayer dollars received by Fannie Mae and Freddie Mac.

The Obama administration and Democrats on Capitol Hill contend that moving too soon with a housing finance revamp could have undercut a fragile recovery.

On Tuesday, the Federal Reserve said it was downgrading its U.S. economic outlook and pledged to provide additional support for the recovery.

Most of the large Wall Street banks have paid back the their bailout money and auto companies could be on track to do the same. But Fannie Mae and Freddie Mac are not expected to ever repay their taxpayer funds.

(Additional reporting by Al Yoon in New York; Editing by Neil Stempleman)