iStock_000018303923XSmallThe Federal Housing Finance Agency has been hard at work merging some of the services of Fannie Mae and Freddie Mac, which have seen their fair share of financial trouble. Edward J. DeMarco, the FHFA’s acting director, said that the plan is to create a “new business entity” that would transform home loans owned or guaranteed by Fannie Mae or Freddie Mac into mortgage-backed securities.

DeMarco adds, “We are designing this to be flexible so that the long-term ownership structure can be adjusted to meet the goals and direction that policymakers may set forth for housing finance reform.”

The move comes as a way to replace the country’s biggest mortgage backers. While an overhaul of the housing finance market is still pending, it’s expected that Congress will move to finalize this deal and create a single vehicle that would be more cost-effective and non-competitive. Both Fannie Mae and Freddie Mac were facing bankruptcy and were seized by the government in 2008 after the subprime housing market fell apart.

The unnamed company would solicit funds from Fannie Mae and Freddie Mac, but would operate with its own CEO and board chairman. It’s unclear when the deal might be finalized, as some politicians fear that making changes while the housing market continues to recover may be a poor decision.

DeMarco said that the new company would handle mortgage securitization, and also assume other duplicate roles at both Fannie Mae and Freddie Mac like providing securities disclosures and paying investors.