The Trump administration unveiled its plan on Thursday, Sept. 5, for ending government control of Fannie Mae and Freddie Mac, the two giant mortgage finance companies that nearly collapsed in the financial crisis 11 years ago and were bailed out at a total cost to taxpayers of $187 billion, according to The Associated Press. 

U.S. Treasury Secretary Steven Mnuchin said, “The Trump administration is committed to promoting much needed reforms to the housing finance system that will protect taxpayers and help Americans who want to buy a home.”

The administration’s plan calls for returning Fannie and Freddie to private ownership and reducing risk to taxpayers. 

While not prominently in the public eye, the two companies perform a critical role in the housing market. Together they guarantee roughly half of the $10 trillion U.S. home loan market.

Fannie and Freddie, operating under so-called government conservatorships, have become profitable again in the years since the 2008 rescue and have repaid their bailouts in full to the Treasury. Now the administration wants to end the Fannie and Freddie conservatorships.

Fannie and Freddie don’t make home loans. They buy them from banks and other lenders, and bundle them into securities, guarantee them against default and sell them to investors. Because the companies are under government control, investors are eager to snap up the “safe” securities.

Treasury officials said they would aim to privatize the two companies without making mortgages tougher and more expensive.

They also said they would work with federal regulators to find out the details on how to make Fannie and Freddie become healthier as well as to reduce the firms’ position in housing finance. The process could take years to carry out and will not affect existing mortgages, according to The Wall Street Journal.

Administration officials said the government should have only a limited role in housing finance, and that the current system leaves taxpayers exposed to potential bailouts again.

“Our view is that the government footprint has become too big,” Treasury Secretary Steven Mnuchin said in an interview ahead of Thursday’s report. ”There are people in Washington who are happy to leave this the way it is for another 10 or 20 years, and that’s not us. We feel an obligation to try to fix this,” according to The Wall Street Journal. 

Privatizing Fannie and Freddie is a top priority for the Trump administration, but any quick steps to abruptly reduce the administration’s role in housing could cause disruption to the housing market as the 2020 election campaign is just about to start.

Mark Calabria, the director of the Federal Housing Finance Agency, indicated recently that it wouldn’t be any time soon, and likely after 2020. Some conditions will have to be met for the companies to be “ready to exit,” he said. They include ensuring the companies have sufficient capital to operate, and continue on their own in the event of a severe economic downturn.

Includes reporting from The Associate Press