Fannie Mae and Freddie Mac will begin winding down, with a new company taking their place. That’s the plan unveiled by the acting director of the Federal Housing Finance Administration — the agency that has overseen Fannie and Freddie since they were taken over by the government in 2008.

In a conference call with reporters, Edward DeMarco outlined the plan to create a new company that would combine the mortgage-securitization operations of the two government-owned enterprises.

For the most part, Fannie and Freddie do the same thing: Buy mortgages from lenders (the “secondary mortgage market”) and repackage them into securities that can be bought and sold as stocks. They were private, government-sponsored enterprises until 2008, when they essentially took a bullet for the housing-finance industry and had to be taken over by the federal government.

When private lenders fled the market, it left the government as the dominant player; it now owns 90-something percent of the secondary mortgage market. And it’s not interested in being such a major player.

So the goal is to pull back Fannie and Freddie’s involvement, while still keeping some government backing available. Hence, DeMarco’s plan.

A few highlights:

  • It will create a new company — completely separate from Fannie and Freddie — that would combine many of the back-end operations of the the two companies.
  • It would continue to increase the fees charged for government guarantees to help encourage private companies to take up the slack.
  • It will direct Fannie and Freddie to each sell at least $30 billion of the mortgage-backed securities they hold to private investors, taking taxpayers off the hook for those.
  • It will reduce the companies’ presence in the multifamily housing business by 10 percent.

It’s still a plan, and it isn’t expected to take effect until next year, so many things could change. So keep an eye out as the details emerge.

Read more about it at the Washington Post. (Or at USA Today.)