The United States is far behind on reforming the country's housing finance system, where the government's mortgage buyers Fannie Mae and Freddie Mac provide funding for the bulk of U.S. home loans, Treasury Secretary Timothy Geithner said on Wednesday.

The biggest source of unfinished business in the financial reform effort is in the housing finance area, Geithner told the Chicago Economic Club.

The Obama administration has proposed to unwind Fannie Mae and Freddie Mac, which buy mortgages and repackage them as securities for investors. The agencies then guarantee the debt.

But the administration and lawmakers are grappling with how to reduce the government's footprint in the housing market without damaging the economic recovery.

Geithner said Fannie Mae and Freddie Mac were not a source of systemic risk now, since the U.S. government was forced to bail them out at the height of the financial crisis and has used billions of dollars in taxpayer money to keep them solvent.

We are much further behind in laying out the future path of reform in the housing finance system and what should replace those institutions, Geithner said, adding that he saw early signs of bipartisan consensus for reforming the housing finance market.

(Reporting by Rachelle Younglai, Jason Lange; Editing by Padraic Cassidy)

Fannie mae Freddie mac Timothy geithner