House Republicans eye winding down Fannie Mae, Freddie Mac WASHINGTON (Reuters) - Republicans in the U.S. House of Representatives on Thursday unveiled draft legislation that would wind down mortgage finance companies Fannie Mae and Freddie Mac, strip the mortgage securitization process from government control and revamp the Federal Housing Administration. The sweeping proposal aims to establish a new framework for the U.S. housing finance system and reduce the government's role in the market as much as possible, Republicans on the House Financial Services Committee told reporters. It would also create a legislative framework and regulatory structure for so-called covered bonds, which would be backed by mortgages but which would remain on the issuer's balance sheet, unlike the mortgage-backed securities backed by Fannie Mae and Freddie Mac. Fannie Mae and Freddie Mac, which would be wound down in five years under the proposed bill, buy mortgages from lenders and repackage them into MBS for investors which they issue with a guarantee. They were seized by the government in 2008 during the financial crisis as they teetered on the brink of collapse under the weight of souring loans. The government pumped $187.5 billion into the companies to keep them afloat, but they have since returned to profitability and have paid about $132 billion in dividends to taxpayers. Any transition to a new housing finance system will likely take years. The largest U.S. banks, credit unions, home builders and real estate brokers all hold a stake in the outcome. Republicans blame Fannie Mae and Freddie for helping to inflate the housing bubble, and they are eager to reduce the government's involvement and make sure taxpayers are never again on the hook for losses. The proposal laid out by the leading House Republicans is an opening gambit in a fight with Democrats, who control the Senate and agree Fannie Mae and Freddie Mac should be shuttered but who want to preserve a government role in the housing market. Reporting by Margaret Chadbourn; Editing by Vicki Allen and Kenneth Barry