On the 12 projects, the Government had insured mortgages worth more than $120 million.

Of the $1.2 billion in mortgages insured under this program, 29 percent have defaulted, costing the public $119 million so far.

Then again, when it becomes necessary for the state to insure mortgages, you have to ask whether it is a dream worth keeping alive.

I like the simple option best: go back to insuring mortgages without creating secondary securitization markets.

It "will no longer insure individual mortgages," the documents say, but would offer financial incentives to private insurers and investors to maintain mortgage money.

House and car insurance, plus insuring mortgages for lenders, were the main reasons for the losses, the company said yesterday.

An independent audit of several Federal funds that insure mortgages shows that they had a record loss of $4.2 billion last year.

In all, the Federal Housing Administration insures mortgages totaling $275 billion.

The companies insure mortgages against default, enabling them to be sold to investors as bonds called mortgage-backed securities.

The bill would allow Freddie Mac to insure high-risk mortgages in new and different ways, not just with mortgage insurance bought from private companies.