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Senators craft bill to end Fannie Mae, Freddie Mac

WASHINGTON — A plan to phase out government-controlled mortgage giants Fannie Mae and Freddie Mac and instead use mainly private insurers to backstop home loans has advanced in Congress.

The plan by Senators Tim Johnson, Democrat of South Dakota and chairman of the Banking Committee, and Mike Crapo of Idaho, the committee’s senior Republican, would create a new government insurance fund. Investors would pay fees in exchange for insurance on mortgage securities they buy. The government would become a last-resort loan guarantor.

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President Obama proposed an overhaul of Fannie and Freddie last year, but Congress has struggled to craft legislation. The government rescued the mortgage giants at the height of the financial crisis in 2008 with a $187 billion bailout, which they have repaid.

The senators’ proposal ‘‘represents a good-faith compromise,’’ Bobby Whithorne, a White House spokesman, said in a statement.

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