The Obama Administration is willing to start the process of winding down Fannie Mae and Freddie Mac, but it must be done gradually over as many as five to seven years to prevent disruptions to the mortgage market and the economic recovery, according to a high ranking Treasury Department official.

Treasury under secretary Jeffrey Goldstein said the administration is committed to shrinking the government share of the mortgage market by increasing GSE guarantee fees and raising downpayment requirements. 

"We will work with the Federal Housing Finance Agency to start this process immediately," Goldstein told a Credit Union National Association government affairs conference in Washington on Monday.

But the under secretary for domestic finance noted that Treasury wants to ensure that community lenders and credit unions have continued access to the secondary mortgage market during this transition to a predominantly 'private' market. The White House also wants to ensure that the 30-year fixed-rate mortgage survives.

Goldstein warned Republican lawmakers that the administration will resist attempts to unnecessarily speed up of the transition period, which could take five to seven years.

He stressed that "unnecessary haste could prove counterproductive.  We will not take actions which could destabilize financial markets or disrupt the broader recovery."

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