Senator Elizabeth Warren is withdrawing her support for a Republican bill that had been on the fast track to bar the Treasury Department from selling Fannie Mae and Freddie Mac preferred shares, according to a person familiar with the matter.

Warren, who originally cosponsored the legislation, pulled her endorsement because the bill still allows the entities' guarantee fees to be used to cover government spending, said a person familiar with her thinking who asked not to be identified because the matter is private. Those fees, which Fannie Mae and Freddie Mac charge to lenders to protect against losses, could be passed down to low-income borrowers if they're increased.

Without Warren's support, the legislation will have difficulty moving to the floor of the Senate this week. Warren, a Massachusetts Democrat, wasn't available to comment on the bill.

The Fannie Mae and Freddie Mac legislation by Senator Bob Corker, a Tennessee Republican, calls for preventing Treasury from selling or liquidating the preferred shares until Congress approves a housing-finance overhaul. The bill would be a blow to investors such as hedge funds that have made a long-shot bet on the companies' stock pay off because it would block them from receiving a payout for their shares.

Hedge fund firms such as Pershing Square Capital Management and Fairholme Capital Management are challenging the U.S. takeover of Fannie Mae and Freddie Mac in federal court to stop an arrangement in which the Treasury takes all of the entities' profits as a dividend on the $187.5 billion taxpayer bailout the companies required after the 2008 financial crisis.

Corker attempted to fast track his legislation, cosponsored by Senator David Vitter, a Louisiana Republican, to a Senate floor vote last week and was met with opposition from Democrats. Senator Sherrod Brown, an Ohio Democrat and the top Democrat on the Banking Committee, had put a hold on the bill. He prefers a comprehensive approach to Fannie Mae and Freddie Mac reform rather than piecemeal legislation, said Greg Vadala, a spokesman for Brown. Vadala declined to comment further on Corker's bill. If Brown were to lift the block, it could clear the way for the legislation to pass quickly in the Senate.

Fannie Mae has returned $142.5 billion to the U.S. Treasury under conservatorship since 2008, while Freddie Mac has returned $96.5 billion, according to their most recent disclosures.

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