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Congress@ (Updates to reflect hearing began, adds Mnuchin comment)
WASHINGTON, Sept 10 (Reuters) - U.S. lawmakers on Tuesday questioned Trump administration officials on their plan to release mortgage giants Fannie Mae and Freddie Mac , the guarantors of over half the nation's mortgages, from government control more than a decade after they were bailed out during the 2008 financial crisis.
U.S. Treasury Secretary Steven Mnuchin, Housing and Urban Development Secretary Ben Carson, and Federal Housing Finance Agency Director Mark Calabria defended their long-awaited blueprint for overhauling the U.S. housing finance system before the U.S. Senate Banking Committee.
"Treasurys plan shows that the GSEs (government-sponsored enterprises) can and should be reformed to ensure their safety and soundness. Although no law prescribes a specific end point for the conservatorships, no conservatorship is meant to be permanent," said Mnuchin in his prepared testimony.
The release of their report, ordered by President Trump in March and published Thursday, is a first step on the long road to reforming Fannie and Freddie after a 2012 attempt by the Obama administration fell flat.
Investors, disappointed by a lack of detail and concrete timelines for changes in Thursday's report, will be listening closely for more information.
Lawmakers are expected to cover a range of tricky legal and economic issues, including how the Treasury plans to bolster Fannie and Freddie's capital and exit its investments.
They are also likely to focus on the plan to shrink the pair's footprint in the secondary mortgage market and reduce their risk to the financial system, all while keeping mortgage costs stable.
Thursday's report called for Congress to pass legislation to ensure the housing market is not destabilized, notably by giving an explicit government guarantee for Fannie and Freddie's mortgage-backed securities, and setting up new charters that would allow other companies to compete.
Republicans and Democrats are already at odds over the report. Republicans praise the inclusion of several recommendations outlined in a draft bill unveiled by committee chair Senator Mike Crapo in February. Democrats say the plan will drive up housing costs for lower-income Americans.
"Rather than create a system that addresses the needs of working families, the Trump Administration has put out half-baked proposals that will make mortgages more expensive and harder to get," said Senator Sherrod Brown, the top Democrat on the committee.
In a Monday interview with Fox Business, Mnuchin said the administration would begin pursuing reforms within six months if Congress failed to advance its own plan.
(Reporting by Pete Schroeder; Editing by Michelle Price and Steve Orlofsky)