Freddie Mac headquarters in McLean, Va.
Freddie Mac headquarters in McLean, Va. - 
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When the federal government poured almost $188 billion into Fannie Mae and Freddie Mac after taking them over in 2008, few thought the investment was a good one.  Fannie and Freddie’s stocks were plummeting and the housing market was in serious decline. Now, it looks like taxpayers will be fully repaid by early next year, thanks to a housing market that has bounced back. 

“When you look across the table now and you’ve got this two headed monster essentially burping up ten-dollar bills, it’s going to be hard to get a lot of folks on Capitol Hill to rally around the cause, to kill either one of these,” says former Fannie Mae executive Tim Rood.

So what do we do now? Was the idea to just break even on Fannie and Freddie?

“Why don’t we just milk this cow for two, three years," Rood says. "And then we could get a 50 percent return on our investment.”

Congress is considering its options. A bipartisan Senate bill would give the private sector a bigger role in the housing market but keep some government mortgage guarantees.  That's Fannie and Freddie's main purpose right now. They don’t make loans. They buy mortgages, bundle them up to be sold as securities, and guarantee them.    

Susan Wachter, who teaches real estate at the University of Pennsylvania’s Wharton School, says there must be at least some government involvement. 

“We need oversight from the federal government," she says. "As umpires, as validators -- a role that was not played by anyone in 2003, 2007.”

A House bill would let the private sector take over the mortgage market. Private investors have already offered to buy the government’s stake in Fannie and Freddie. Other investors are snapping up Fannie and Freddie stock that was deemed worthless just a few years ago. Guy Cecala, publisher of Inside Mortgage Finance, says sooner or later, you do have to let the private sector in.

“About 90 percent of the mortgage market is government backed," he says. "And that’s clearly not a sign of a healthy market.”

But Cecala doesn’t think Congress will act anytime soon. He expects Fannie and Freddie’s billions to keep rolling into the Treasury, for at least a few more years.