"The administration is running out of options if it wants to avoid having a slowing economy pinned on (Republicans) next year," as the presidential election looms, mortgage industry consultant Howard Glaser wrote in a research note Sunday night. The Bush administration is "willing to consider action that would have been inconceivable just weeks ago."

Still, the rate-freeze approach being developed by Treasury Secretary Henry Paulson and mortgage industry executives stops short of a taxpayer-funded bailout for borrowers, an idea rejected by both Democrats and Republicans.

Paulson was scheduled to present his latest views on the mortgage crisis, and its impact on the economy, Monday morning as part of a full-day housing conference at the National Press Club in Washington.

Also scheduled to speak were: Angelo Mozilo, chief executive of Countrywide Financial Corp.; Daniel Mudd, CEO of Fannie Mae; and top executives from luxury homebuilder Toll Brothers Inc. and lender Washington Mutual Inc.

Some tentative details of the rate-freeze plan already have trickled out. For example, homeowners would be given a break of two to five years if they are currently making payments on time but wouldn't be able to do so when their mortgages adjust to higher rates.

The plan faces resistance from some on Wall Street, who say the government shouldn't press the owners of loans held in complex mortgage securities to alter them if it's not investors' best interest to do so. They warn of a flood of lawsuits.

"The government's got a role to play, but it is limited," President Bush said at the White House in late August.

Then, in October, when Sheila Bair, chairman of the Federal Deposit Insurance Corp., floated the idea of freezing interest plan as a way to stave off foreclosures, the response from top Bush administration officials and Wall Street investors was tepid.

But Paulson has since warmed to the idea of more active government involvement, as the outlook on housing and on Wall Street has worsened considerably.

Most recently, government-sponsored mortgage companies Fannie Mae and Freddie Mac, normally thought to be bastions of stability in the mortgage industry, reported combined third quarter losses of more than $3 billion. Plus, home prices and sales have continued to sink.

Amid the widening fallout, executives at top Wall Street investment banks are losing their jobs. Morgan Stanley co-President Zoe Cruz was the latest casualty last week, just weeks after rivals Merrill Lynch & Co. and Citigroup Inc. ousted their chief executives.

Many analysts say next year is likely to be even worse.

With $361 billion in subprime loans made to borrowers with weak credit resetting at higher interest rates next year, foreclosures will peak in the third quarter of next year and won't drop back to more normal levels until 2011, Banc of America Securities predicted in a report last month. The report also estimated that the median U.S. home prices would fall 15 percent over the next four years and not rebound until 2012.

Big hits for investors are also in store. A widely circulated Goldman Sachs report last month said more than $100 billion in additional bank write-offs and losses are on the horizon due to bad mortgage investments. And it warned that credit card debt and auto loans could be the next sectors to suffer.

"We're still in free fall," says Susan Wachter, a real estate and finance professor at the University of Pennsylvania's Wharton School of Business, who believes further government and industry action will somewhat mitigate economic conditions that are bound to deteriorate further.