Freddie and Fannie finance roughly half of the U.S.’s mortgage debt, and have been central players in the real estate market’s recent credit woes.

One plan, co-designed by Treasure Secretary Henry Paulson, is for Freddie and Fannie to undergo a conservatorship, which essentially gives government overseers legal control over both companies.  Not surprisingly, each respective CEO will be removed (wonder if they’ll still get their inevitable billion dollar golden parachute rewards?).

A recent report by the Mortgage Bankers Association finds over 4 million U.S. homeowners behind or in foreclosure on mortgage payments for 2008.  This is largely the fallout from “optimistic” loans given out to homeowners who lack the ability to pay them off.  These sort of shenanigans have cost Fannie and Freddie a combined total of $3.1 billion between just April and June!

As significant as this situation is, it’s not without precedent: eleven federally insured banks have failed this year, and the government recently arranged the takeover of investment bank Bear Stearns by JP Morgan Chase.

It will be interesting to see how the U.S. government manages all these distressed mortgage accounts.