In 2008, the government sponsored enterprises (GSEs) Fannie Mae and Freddie Mac were nationalized and given a $188 billion capital injection by taxpayers to stay afloat. Structural reform of the GSEs seemed obvious and imminent. After all, a 30 percent national decline in home prices was a major contributor to the collapse of many financial institutions, including the GSEs. Trillions of dollars of homeowner equity, and subsequently personal savings, were wiped out, and our economy is still feeling the effects in latent consumer demand. Yet five years later, nothing has been done to address Fannie and Freddie.

Nine out of 10 loans made in our country today come with an explicit government guarantee, from either the Federal Housing Administration or from one of these two mortgage behemoths, which are stuck in legal limbo and hold absolutely no capital whatsoever. Meanwhile, the private sector has been completely priced out of the business of making mortgage loans. These factors have created the worst of all worlds. Our system stagnates, and even the slightest hiccup in the economy could mean yet another bailout.

On Tuesday, we are introducing legislation to change that.

First, we mandate sufficient capital, up front, to protect taxpayers against loss. Our bill requires that private market participants hold 10 percent of the first loss of any mortgage-backed security that purchases a government reinsurance wrap. This is twice the loss severity experienced by Fannie and Freddie during the crisis. In fact, if this standard had been in place during the crisis, taxpayers would have taken no losses.

Second, we maintain liquidity in the market by putting in place an infrastructure for splitting up credit investors, who want to take on this risk of loss, from rate investors, who have traditionally supplied our market with the funds necessary to borrow at low rates. This will help keep mortgage rates competitive, while also isolating the taxpayer from loss.

Third, we dissolve Fannie and Freddie within five years of bill passage and transfer appropriate utility duties and functions to a different, modernized and streamlined agency. All of this is done with a fiduciary duty to maximize returns to the taxpayer, via the Treasury, as the GSE’s assets are sold off.

Fourth, we eliminate Fannie and Freddie’s affordable housing goals and replace them with more transparent and accountable counseling and rental assistance programs. Our new access fund – paid for not by taxpayers but through a small assessment on only those loans that go through the government platform – is dedicated to the sustainability of homeownership and to providing decent rental opportunities, while making it very clear where the money goes and putting in place strict criminal penalties against misuse.

Fifth, we make sure that institutions of all sizes have direct access to the secondary market by forming a new corporation mutually owned by small banks and credit unions. This ensures that local banks and credit unions aren’t gobbled up by the mega banks as soon as Fannie and Freddie are dissolved.

Some might say this goes too far, others not far enough. But regardless of where your political sensibilities are, you cannot think the current system works. Make no mistake; time is not on our side. As memory of the crisis fades, the GSEs will again entrench themselves deeper and deeper into our system of housing finance. Soon, the path of least resistance will be to simply reconstitute Fannie and Freddie as they were. That would be totally irresponsible.

We believe our approach is the best chance the 113th Congress has of real reform that protects taxpayers and mortgage market liquidity, while moving to a modernized 21st-century housing finance system. The alternative is to wait and do nothing, which is the equivalent of asking taxpayers to write a blank check for future bailouts. It is time to end the failed model of private gains and public losses.

Sen. Bob Corker (R-Tenn.); Sen. Mark Warner (D-Va.); Sen. Mike Johanns (R-Neb.); Sen. Jon Tester (D-Mont.); Sen. Heidi Heitkamp (D-N.D.); Sen. Dean Heller (R-Nev.); and Sen. Jerry Moran (R-Kan.), members of the Senate Banking, Housing and Urban Affairs Committee and sponsors of the Housing Finance Reform and Taxpayer Protection Act.