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within 6 months@ (Adds more Mnuchin quotes, background)
WASHINGTON, Sept 9 (Reuters) - U.S. Treasury Secretary Steven Mnuchin said on Monday the Trump administration would take administrative measures to overhaul mortgage giants Fannie Mae and Freddie Mac if it failed to secure congressional support for its plan within six months.
The Treasury is negotiating with the Federal Housing Finance Agency, which oversees the mortgage giants that were bailed out during the 2008 financial crisis, and hopes for a "near term" agreement allowing the two companies to retain their earnings, Mnuchin said in an interview with Fox Business Network.
"They have been in conservatorship too long and we want to make sure they're not in conservatorship on a permanent basis," Mnuchin said of the two companies that guarantee more than half of the mortgages in the United States.
"So our first choice is to work with Congress on a bipartisan basis, but if we can't do that we're perfectly comfortable moving for it on the administrative side and making the changes we need to do."
Fannie Mae and Freddie Mac securities soared on Monday with the preferred shares last up more than 15 percent while the common stock was up more than 19%.
The Treasury said on Thursday the government should draw up a plan to begin recapitalizing Fannie Mae and Freddie Mac, while calling on Congress to draw up a comprehensive housing reform that would allow them to be safely freed from government control.
Mnuchin said he hoped to get Congress on board within the next three to six months, otherwise "we'll move on, on the administrative front."
The Treasury holds warrants representing 80% of Fannie and Freddies common stock, as well as senior preferred stock agreements that allow it to sweep the firms' profits into its coffers. That arrangement has left Fannie and Freddie with just around $3 billion of capital each, leaving taxpayers exposed to future bailouts.
Mnuchin said an agreement with FHFA allowing the two companies to keep their earnings "will be a significant increase in capital and a step in the right direction to us ultimately raising third-party capital."
He said it was unclear when he Fannie and Freddie would come out of conservatorship.
"We're going to do it as quickly as we can. ... Part of it depends on how quickly we get Congress to act," Mnuchin said. (Reporting by Susan Heavey; Writing by Mohammad Zargham; Editing by Chizu Nomiyama)