Intermediate Capital Group Plc is among leveraged loan funds whose expansion into real estate financing this year may help hoteliers and main street retailers fill a $70 billion void left by banks paring risky loans.

Blackstone Group LP’s Europe hotels owner got 150 million euros ($197 million) of mezzanine loans Dec. 13 from funds, reducing the amount it owes to senior bank lenders. Banks cut new U.K. commercial real estate lending by 69 percent last year as they repaired balance sheets battered by the financial crisis, a survey by De Montfort University showed.

“The opportunity is huge,” said Philip Keller, chief financial officer at London-based Intermediate Capital, which made its first move into the market by buying a stake in U.K. real estate debt this month. “We see similar dynamics in the commercial property market to buyout financing, in that banks are sitting on massive property balance sheet which they have to reduce and that’s creating inefficiency in real estate financing.”

The fate of Freddie Mac and Fannie Mae will be center stage in January when the Obama administration makes its required Congressional recommendations about what to do about the two companies.

The stakes for homeowners and the economy couldn't be higher as the next Congressional session will determine if the U.S. has a private mortgage market or if, by controlling housing finance, government bureaucrats will be able to direct where Americans live and how much they pay for housing.

While the administration is trying to figure out how much is too much government intervention in the housing finance markets, it doesn't seem to be concerned with the underlying problems that shut down virtually all new issue volume in the private mortgage securities markets.

As a result, administration proposals are doomed to fail until it acknowledges that radical mortgage finance reform is a prerequisite for the U.S. to break its dependency on Freddie Mac and Fannie Mae. Reform is needed to induce investors to buy newly issued non-government guaranteed mortgage backed securities.

A sharp drop in foreclosure filings has resulted in a steep decline in money available to fund Florida’s court system, although it’s not certain if that reduction in filings is only temporary, a state Senate committee has been told.

One senator on the panel said the Legislature and others should look at ways of speeding up civil cases as an alternative to spending more on the courts.

One of the most common Republican battle cries over the past year has been to wind down government sponsored mortgage companies Fannie Mae and Freddie Mac (F&F). They played a major role in creating the housing bubble that led to the financial crisis. The taxpayers' loss on their rescue will exceed $150 billion, which is several times the cost of the rescue for the rest of the financial industry. Yet a new report indicates that Republicans might not be so eager to tear down F&F after all.