In a significant step toward overhauling the mortgage finance market, the Federal Housing Finance Agency announced March 4 that it would be forming a new company to merge some of the functions of Fannie Mae and Freddie Mac, The Wall Street Journal reported.

In a speech before the National Association of Business Economics in Washington, D.C., FHFA Acting Director Edward J. DeMarco said the new company would consolidate back office functions at the two government-sponsored enterprises, which would reduce duplicated tasks and allow for operational upgrades.

The new company, which would be jointly owned by Fannie and Freddie, would have a separate physical location from the GSEs as well as its own chief executive and board of directors. Eventually the company would be privatized or folded into the government, depending on how the White House and Congress decide to wind down the GSEs.

“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,” DeMarco said, the Journal reported.

Since they were taken into government conservatorship in 2008, the GSEs have cost American taxpayers $131 billion, and they currently back 90 percent of all new mortgages.

“What we are trying to do is to ease the transition from where we are today to wherever lawmakers decide the country ought to ultimately go,” DeMarco said, the Journal reported.

This new company is one of several priorities FHFA has outlined for Fannie and Freddie. Another such initiative includes requiring Fannie and Freddie to each unload $30 billion of non-government backed mortgage securities to private investors.

DeMarco did not announce a timeline for when the merge would occur.