US House Republicans open to housing finance talks

WASHINGTON, March 1 (Reuters) - House Republicans on Tuesday expressed willingness to work with the Obama administration on what is expected to be a drawn out process of crafting legislation to overhaul the U.S. housing finance system lashed by the financial crisis.

Appearing before lawmakers for the first time since unveiling several options for reforming housing finance, Treasury Secretary Timothy Geithner cautioned Congress not to act too quickly as he called on lawmakers to pass legislation within two years.

"House Republicans are ready and willing to ... work with you to produce a comprehensive housing finance reform plan -- a plan that is based on private capital and protects taxpayers from further losses and future bailouts," House Financial Services Committee Chairman Spencer Bachus said in prepared testimony.

"It is my hope that this hearing today is just the start of this needed dialogue," Bachus said.

The Obama administration earlier this month unveiled three long-term options for what to do over the longer term about Fannie Mae (FNMA.OB) and Freddie Mac (FMCC.OB), the two mortgage finance behemoths seized by the Bush administration in 2008.

That government control was meant to be temporary, but two and a half years later the process of crafting legislation for a long-term solution is just beginning.

Fannie Mae and Freddie Mac have taken more than $134 billion in direct taxpayer aid and the government estimates that total could climb as high as $259 billion.

The government, through Fannie Mae, Freddie Mac, and the Federal Housing Administration, is now backing almost nine in 10 new mortgages.

The Obama administration also announced in February several short-term steps to make those government-backed mortgages more expensive going forward in a bid to lure private capital back to the mortgage market.

"The administration is committed to a system in which the private market -- subject to strong oversight and strong consumer and investor protections -- is the primary source of mortgage credit," Geithner said in his prepared testimony.

(Reporting by Corbett B. Daly, Editing by xxxxxxxx)