After years of back-and-forth and shoulds, woulds and coulds, some on Capitol Hill finally took a step toward GSE reformation that extends beyond mere talk. The Federal Housing Finance Agency last week unveiled a strategic plan that would help prepare the market for their eventual absence.

The plan has three main components: build a new infrastructure for the secondary mortgage market; gradually contract the GSEs’ dominant presence in the market while simplifying and shrinking their operations; and maintain foreclosure prevention activities and credit availability for new and refinanced mortgages.

Currently, Fannie and Freddie back about three-quarters of all new mortgages, and other government entities guarantee the balance. And with CMBS fizzling out last year, the securitization market pretty much belongs to Fannie and Freddie as well. Given that the government is basically the backbone of the housing finance system today, as well as the secondary mortgage market, it’s understandable that any change to the GSEs would have a tremendous impact on the industry.