As expected, the fight over the fate of Fannie Mae and Freddie Mac is now heating up on Capitol Hill.

Later today House Republicans are expected to introduce a bill from GOP Conference Chairman Jeb Hensarling that would wind down the two government sponsored entities in five years.

Hensarling and other Republicans not that the Congressional Budget Office has estimated the GSE’s will cost taxpayers $389 billion over ten years.

They’ve already inhaled $150 billion in taxpayer dollars.

The bill, backed by House Financial Services Committee Chairman Spencer Bachus, is similar to bills introduced in 2008 and 210; the difference now of course is the new House Republican majority.

Aides familiar with the bill say it would put an end date to the GSE’s conservatorship two years from the date of enactment.

It would repeal the GSE’s affordable housing goals mandate, shrink their size by capping the maximum portfolio size at $700 billion and then gradually reduce to $250 billion over five years. It would also return the conforming loan limit to $417,000.

That last one is particularly important to think about as we struggle through this Spring market and try to call it a “recovery.” Credit is still one of the biggest barriers to recovery today, and the private market for jumbo loans is thin at best.

I want to share some insight from FBR’s Paul Miller:

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