FHFA releases plan for Freddie, Fannie exit But the effort is in tension with other measures being pursued by Fannie and Freddie and the Obama administration to increase government support for housing. A year ago, the Obama administration released a white paper calling for a gradual wind-down of Fannie and Freddie. But for most of the past year, the White House has been pushing the companies to take steps to help homeowners, by reducing mortgage debts, for instance, and making it easier to refinance at lower rates. These measures require Fannie and Freddie to take new risks with taxpayer money, further cementing the role of the government in housing. The FHFA, which oversees Fannie and Freddie in a legal arrangement known as conservatorship, has agreed to introduce new measures to allow more homeowners to refinance, but it has resisted taking steps that would burden Fannie and Freddie with more taxpayer losses. "This is clearly one of the challenges that FHFA faces as conservator," said Edward DeMarco, acting FHFA director. We're getting a clear message about wind-down. At the same time, there are continuing to be calls for ... Fannie and Freddie to do more. Fannie and Freddie are essential cogs in the $10 trillion housing finance market. They buy bundles of mortgage loans and hold them, flooding lenders with cash to make new loans. On a much greater scale, they insure mortgage loans meeting certain criteria against default. As a result, lenders are easily able to make loans to borrowers and then sell those loans to investors around the world, freeing up more cash to make more loans. Fannie and Freddie, together with the Federal Housing Administration, have dominated the housing market in the past four years as banks withdrew sharply from lending during the financial crisis and recession. The private market has not bounced back, and policymakers remain concerned about the risk to taxpayers presented by the government's large footprint in the mortgage market. In addition to suggesting ways to wind down the companies, which could take five to 10 years to accomplish, the FHFA plan discusses efforts to lay the groundwork for a new mortgage system. This would include, among other things, a new process for pooling loans into bundles and selling them to investors. The plan also discusses the things that Fannie and Freddie can continue to do to help lessen the nation's foreclosure crisis without increasing taxpayer losses. These include facilitating short sales and deeds-in-lieu - both methods of a homeowner being forgiven for part of the debt owed to a bank either when selling the home or transferring ownership to the lender.