WASHINGTON — The House Financial Services Committee narrowly approved legislation to overhaul the mortgage finance system Wednesday morning after more than 10 hours of back-and-forth debate on Tuesday.

The bill, introduced by Chairman Jeb Hensarling, R-Texas, and other senior Republicans on the panel, would unwind Fannie Mae and Freddie Mac and replace the two government-sponsored enterprises with a system lacking new government guarantees. The bill would create a "utility" that would develop best practices for how a new private mortgage market would operate, but would be barred from supporting that market in any way.

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