No quick fix for Fannie and Freddie seen from meeting

WASHINGTON (Reuters) - The Obama administration will pick the brains of housing finance leaders on Tuesday on how to fix Fannie Mae and Freddie Mac, but no major changes in the government-rescued mortgage companies are expected before 2011.

Treasury Secretary Timothy Geithner will host a conference as the administration works to make good on its promise to unveil an overhaul plan by January for the troubled firms, now under government control.

Fannie Mae and Freddie Mac have received nearly $150 billion in taxpayer bailout money since being seized by the Bush administration in 2008. Their problems and costs were not addressed in the Wall Street reform law passed in July.

The problems won't be solved anytime soon, analysts say, with Congress focused on elections in November, federal spending coffers largely depleted and nerves on edge about making changes that could trigger another housing market crash.

Bank and mortgage-backed securities investors are watching warily as the administration weighs options, ranging from nationalization at one extreme to privatization at the other, with a wide range of alternatives in between.

Geithner has said there is a "good case" for the government to stay involved in housing finance. But he and other officials have been careful not to say much more than that, except to stress that the old Fannie Mae/Freddie Mac model is dead.

"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 ... That would be a fundamental change," Michael Barr, the Treasury Department's assistant secretary for financial institutions, said last week.

Participants will include executives from Wells Fargo and Bank of America, as well as Bill Gross, the co-founder of bond-trading firm Pacific Investment Management Co,, and Lewis Ranieri, who helped develop the model for the private mortgage-backed securities market that was central to the housing bubble that burst in 2007-2008.

The conference occurs a day after U.S. homebuilder sentiment unexpectedly fell for a third straight month in August to its lowest level in nearly 1-1/2 years, according to a survey that added to evidence of slowing economic recovery.

(Reporting by Kevin Drawbaugh; Additional reporting by Corbett Daly; Editing by Kenneth Barry)