* Idea is one of many competing plans for housing finance
* No consensus on if government should offer guarantee
* Final action not see until after 2012 elections
WASHINGTON, July 6 (Reuters) - Mortgage finance firms Fannie Mae (FNMA.OB) and Freddie Mac (FMCC.OB) would be folded into a single government-run entity under legislation a Republican lawmaker will introduce on Thursday.
Representative Gary Miller of California is set to unveil a bill that would create a utility-like entity and phase out government-controlled Fannie Mae and Freddie Mac.
The new financing company would purchase mortgages and repackage them as government-backed securities. Unlike Fannie and Freddie, it would not have shareholder investors. The National Association of Homebuilders and the National Association of Realtors are expected to endorse the proposal.
Miller is one of a handful of lawmakers on the House of Representatives Financial Services Committee who have attempted to push forward legislative proposals to revamp the U.S. housing finance system.
Fannie Mae and Freddie Mac have operated under federal conservatorship since they were seized amid soaring losses in September 2008. Along with the Federal Housing Administration, they now back more than 85 percent of all U.S. residential mortgages in some way.
Republican lawmakers are keen to lessen the government's involvement in the $10.6 trillion residential mortgage market, but they have failed to coalesce around a single approach. Some want to entirely shut down Fannie Mae and Freddie Mac, the two largest providers of mortgage funding, while others want to lessen their influence over time.
The bill from Miller, which is being co-sponsored by Representative Carolyn McCarthy, a New York Democrat, adds to the competing approaches on the table.
Earlier in May, Representatives Gary Peters, a Michigan Democrat, and John Campbell, another California Republican, introduced legislation that would create at least five private companies to replace the two co-called government-sponsored enterprises, or GSEs.
The dividing line among many lawmakers is whether or not to provide a government backstop for mortgages and, if so, on what terms to provide the guarantee. House Financial Services Committee Chairman Spencer Bachus of Alabama is attempting to forge a consensus among his Republican base.
However, any bill that is crafted by his committee and moves forward to pass on the floor of the Republican-led House would likely still be in jeopardy once it reaches the Democrat-controlled Senate.
Representative Scott Garrett, a New Jersey Republican who heads a subcommittee that oversees Fannie Mae and Freddie Mac, told Reuters the aim of the committee is to "end the bailouts."
"I've asked anyone who is going to try and solve the GSE problem -- and I'm open to ideas -- to make sure they don't have a government backstop where the taxpayer can take a hit for it," he said.
Garrett's subcommittee has approved separate bills to reform and downsize the two firms. Most bills that have advanced create a largely private mortgage-finance system.
"The longer they stay in conservatorship, the longer they never leave," said Phillip Swagel, who served in the Treasury Department under President George W. Bush. "The committee is putting out a range of bills and making progress on different fronts, but not confronting the key decision, which is the role of the government in the system."
With the housing market still in the doldrums, any final decisions on housing finance reform are expected to be put off until after elections in 2012. (Reporting by Margaret Chadbourn; Editing by Leslie Adler)