Looking ahead, McTaggart expects GSE reform to take another five years, with some continuing government role, following the "market failure" during the credit crisis.

Kevin Petrasic -- a partner in the Global Banking and Payments Systems practice of Paul Hastings in Washington -- says that "having 90% of the all mortgage loan originations backed by Fannie and Freddie is a bad thing," but that transition away from the GSEs needs to proceed slowly.

"One of the central concerns from a macro perspective of FHFA is trying to make sure that the solution for Fannie and Freddie allows for a continued stable housing market," Petrasic says, adding that "you don't want to go through all this effort to privatize, and to back to where we started."

"I would imagine that the primary agenda for the administration and Congress is to figure out a way to stabilize the housing market for the long term, without reliance on government programs," according to Petrasic.

While nobody can predict exactly how GSE reform might affect investors feasting on GSE shares today, "there can certainly be benefits to Fannie Mae and Freddie Mac, and to investors," he says.

-- Written by Philip van Doorn in Jupiter, Fla.

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Philip W. van Doorn is a member of TheStreet's banking and finance team, commenting on industry and regulatory trends. He previously served as the senior analyst for TheStreet.com Ratings, responsible for assigning financial strength ratings to banks and savings and loan institutions. Mr. van Doorn previously served as a loan operations officer at Riverside National Bank in Fort Pierce, Fla., and as a credit analyst at the Federal Home Loan Bank of New York, where he monitored banks in New York, New Jersey and Puerto Rico. Mr. van Doorn has additional experience in the mutual fund and computer software industries. He holds a bachelor of science in business administration from Long Island University.

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