A trio of Democratic congressmen on Thursday unveiled a plan to wind down Fannie Mae / Federal National Mortgage Assctn Fnni Me (OTCBB:FNMA) and Freddie Mac / Federal Home Loan Mortgage Corp (OTCBB:FMCC).

Fannie Mae FHFA

The new bill adds to the mix of bills in the Senate and House of Representatives, though it is pitched as an attractive alternative that could work for both political parties.

New proposal to facilitate eventual sale

The trio of House Democrats – John Delaney, John Carney and Jim Himes – unveiled the new proposal that would wind down the U.S. mortgage finance giants over five years, creating a path for their eventual sale. They highlighted that their plan provides the ideal private and public sector partnership by maintaining a government guarantee for mortgages but having the private sector price the risk.

The new proposal would maintain a government guarantee and hence the 30-year fixed rate mortgage and other affordable housing options, by restructuring Ginnie Mae, which is wholly owned by the government and focuses on providing affordable housing to low and moderate income households through a guarantee for mortgage lenders.

Growing number of proposals for Fannie and Freddie

The new bill joins to a growing number of proposals for Fannie / Federal National Mortgage Assctn Fnni Me (OTCBB:FNMA) and Freddie / Federal Home Loan Mortgage Corp (OTCBB:FMCC) reflecting considerable momentum to resolve the companies seen as one of the last remnants of the crisis.

Last year, Sens. Bob Corker, R-Tenn., and Mark Warner, D-Va introduced a bipartisan Senate bill to replace the Federal Housing Finance Agency, the conservator of Fannie Mae and Freddie Mac, with a government agency, the Federal Mortgage Insurance Corporation.

Republicans in the House of Representatives, led by Jeb Hensarling of Texas, proposed a bill that would eliminate the two mortgage giants and limit government involvement in housing finance to the mortgage insurance provided by the FHA.

During November, Fairholme had announced its intention to acquire the insurance businesses of these two Government Sponsored Enterprises (GSEs) through exchange of equities worth $52 billion. Fairholme is the largest stakeholder of preferred shares in these two GSEs. However, the recapitalization plan was rejected by the White House.

According to Steve Goldstein of Marketwatch the new proposal as a whole stands little chance of being adopted. The new proposal would call for private capital to backstop the first 5% of mortgage securitization, with Ginnie Mae – in partnership with more private money – backing the rest.