Although there were sharp disagreements at a Treasury Department conference Tuesday about what kind of role the government should take in the future of housing finance, one idea in particular seems to be gaining momentum: creating an insurance fund to back MBS.

Under a plan advanced by several participants, Fannie Mae and Freddie Mac would be replaced by privately capitalized, federally chartered companies that buy mortgages from the primary market and deliver them into a federally guaranteed mortgage-backed security.

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