Expand homeownership or achieve returns for the shareholders? That was the balancing act that ultimately toppled government housing firms Fannie Mae (NYSE:FNM) and Freddie Mac (NYSE:FRE). The order of priority is now clear: The companies’ new conservator has announced measures to alleviate the terms of existing mortgages in order to avoid home foreclosures.

What of the taxpayer-shareholders?
The trouble is, those measures could end up costing the new shareholders -- and under the new financial order, that’s the U.S. taxpayer.

The bright side is that taking steps to avoid foreclosure can be a rational economic course of action, if private-sector banks (is there any such thing anymore?) are any example. Homes that are in foreclosure lose value more quickly than those that remain inhabited, for example.

JPMorgan Chase (NYSE:JPM), Bank of America (NYSE:BAC), and Citigroup (NYSE:C) have already announced programs to reduce the number of foreclosures. Expect the remaining large lenders, such as Wells Fargo (NYSE:WFC), to follow suit (Wachovia (NYSE:WB) had already initiated a program before being acquired by Wells) -- the government will “encourage” them to take that path.

Things aren’t getting simpler for bank investors
A financial crisis typically creates superb investing opportunities among financial stocks. However, a fluid regulatory environment and the extent of government intervention require that investors be extra cautious when navigating waters that have become increasingly murky.

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Alex Dumortier, CFA, has a beneficial interest in Wells Fargo but not in any of the other companies mentioned in this article. JPMorgan Chase and Bank of America are Motley Fool Income Investor selections. Try any of our Foolish newsletters today, free for 30 days. The Motley Fool has a disclosure policy.