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Is the end nigh for Fannie and Freddie?

It should be.

For five years Fannie and Freddie have survived on life support—$187.5 billion in taxpayer funds so far, to be exact. But whether the two U.S. housing-finance agencies will live or meet their institutional death likely depends on the next few months.

Last week, the White House nominated a new director of the Federal Housing Finance Agency, which has been in charge of overseeing the two mortgage behemoths since the government nationalized them in 2008 amidst growing concern over financial losses caused by widespread mortgage defaults. Should the new FHFA chief want to wind down Fannie and Freddie, he’ll probably have a narrow window of opportunity to do so.

For years after the two agencies, which back about half of all U.S. mortgages, came dangerously close to default at the height of the financial crisis, a consensus seemed to have emerged in Washington that Fannie and Freddie ought to go. The government, ran the new wisdom, should considerably curtail its role in the residential mortgage market.

Such an exit, though, seemed unthinkable until a few months ago, when U.S. housing prices ended their six-year slide and finally started climbing again.

But no sooner had the housing market embarked on the way to recovery, than pressures arose on the government to once again let Fannie and Freddie be. Hedge funds have begun lobbying for the two agencies to be privatized, reports the Washington Post. That’s because Fannie and Freddie, which used to be shareholder-owned corporate entities that enjoyed what was widely interpreted as an implicit government backing, have been earning healthy profits since the middle of last year. If privatized, the agencies would likely resume paying dividends to preferred stockholders, which include, you guessed it, the lobbying hedge funds.

And pressures are rising as well from liberal activists and housing affordability advocates for the government to remain heavily involved in the business of turning Americans into homeowners.

As memories of crisis fade and Fannie and Freddie’s balance sheets swing back to the black, an “unholy alliance,” as some dubbed it, seems to have emerged between consumer and finance industry groups fighting against an overhaul of housing finance.

Unsurprisingly, the political consensus on resizing the government’s role in the mortgage market is wavering. “Pushing any proposal … that may threaten the existence of the fixed, 30-year mortgage product,” writes the Wall Street Journal, “is a political loser.” The longer Fannie and Freddie are allowed to turn profits without radical reforms, its seems, the stronger opposition to change will become.

Any decision to transfer more of the risk of mortgage lending from taxpayers to the banks and other private institutions is bound be unpopular in many quarters as it will raise the costs of borrowing to buy a house.

Still, if the government doesn’t bite the bullet soon, the status quo might well prevail.

Erica Alini is a California-based reporter and a regular contributor to CanadianBusiness.com, where she covers the U.S. economy. Follow her on Twitter: @ealini.