NEW YORK, Nov 4 (Reuters) - Costs to "resolve" U.S. mortgage finance giants Fannie Mae and Freddie Mac, and capitalize a new entity to replace their roles in supporting the nation's housing market, could reach $685 billion, credit rating company Standard & Poor's said on Thursday.
Under current conditions, it is unlikely that the housing and mortgage markets can operate normally without substantial government involvement, S&P analysts said in a report.
The debate on mortgage finance reform is expected to take center stage early next year as the Obama administration is set to outline remedies for the two companies, whose losses on loan they guaranteed have cost taxpayers some $148 billion.
U.S. Treasury support for the companies could reach a total of $280 billion, S&P said, before Congress decides how to overhaul the mortgage finance system.
(Reporting by Al Yoon; Editing by Padraic Cassidy)
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