Obama housing proposal now expected in early February

WASHINGTON Jan 21 (Reuters) - A long-awaited proposal from the Obama administration on what to do about mortgage finance giants Fannie Mae (FNMA.OB) and Freddie Mac (FMCC.OB) is now expected to be unveiled in early February, rather than late January, congressional and administration sources said on Friday.

"It would not be unreasonable for something this complex and this far-reaching to be pushed back a little bit," an administration official told Reuters.

The administration had earlier promised to unveil its plan by a congressionally mandated Jan. 31.

The official, who spoke on condition of anonymity, noted that there is a full agenda for the administration in the coming weeks.

U.S. President Barack Obama is scheduled to make his State of the Union address to a joint session of Congress on Tuesday and present his budget proposal sometime next month.

The Bush administration seized Fannie Mae and Freddie Mac in late 2008 amid mounting losses from bad mortgage loans and placed them into what was supposed to be a temporary conservatorship.

Faced with a fragile housing market still largely dependent on the two firms, the Obama administration put off addressing their future in hopes that a housing recovery would take hold.

The administration's forthcoming proposal is just a starting point as Congress is expected to have a rigorous debate about the role of the two firms, and the Federal Housing Administration, in the U.S. housing finance system.

Treasury Secretary Timothy Geithner has been tight-lipped about what he would like to see, though he told a high-profile summit on the topic last summer he sees a role for some form of government guarantee for U.S. mortgages.

"I believe there is a strong case to be made for a carefully designed guarantee in a reformed system with the objective of providing a measure of stability in access to mortgage finance even in future economic downturns," Geithner said in August.

At the same time, officials have signaled that they want to slowly wind down the market share of Fannie and Freddie by increasing the cost of government-backed mortgages to allow private lenders to become more competitive in the marketplace. (Additional reporting by Rachelle Younglai; Editing by Leslie Adler)