NEW YORK (Reuters) - A Federal Reserve official warned U.S. lawmakers on Tuesday that any reforms that reduce the massive lending presence of mortgage giants Fannie Mae and Freddie Mac in the multi-family real estate market could shock that sector of the economy.

FILE PHOTO: The Federal Reserve Bank of Boston's President and CEO Eric S. Rosengren speaks during the "Hyman P. Minsky Conference on the State of the U.S. and World Economies", in New York, April 17, 2013. REUTERS/Keith Bedford

Members of Congress and the Trump administration have signaled they will overhaul the two government-sponsored enterprises (GSEs), which the government took over during the 2008 financial crisis, after they suffered massive losses on bad mortgages.

Boston Fed President Eric Rosengren, who also used a speech to warn about the inflationary pressures if U.S. unemployment were to drop much further, said the agencies hold or guarantee some 44 percent of multi-family loans.

“Policymakers looking to reform the GSEs might look at the GSEs’ large and growing footprint in the market and ask whether this level of government-sponsored exposure is safe, and whether that level of government support is appropriate,” he said at New York University Stern School of Business.

“A potential and significant shock to this sector of the commercial real estate market could occur if proposals require the GSEs to reduce their holdings of multi-family loans.”

Treasury Secretary Steve Mnuchin has said Fannie and Freddie, which guarantee U.S. home loans and repackage them into securities for sale to investors, cannot be left as is for the next four years.

Several reform ideas have been floated in recent years, ranging from turning the GSEs into public companies to phasing them out completely.

It was at least the third time in recent months that Rosengren, an influential regional Fed president, raised concerns about high U.S. real estate prices and how that might exacerbate any future economic downturn.

Scott Crowe, chief investment strategist at CenterSquare Investment Management, a real asset investment arm of BNY Mellon, said the Fed has closely examined multi-family apartment supply in gateway cities such as New York and San Francisco.

The Fed’s focus has tightened credit-lending standards significantly the past six to eight months, he added.

“We haven’t built new apartments or any real estate asset type to the point where you’re seeing significant rent reductions, bankruptcies or people losing a lot of money,” he said.

The Fed has raised rates twice since December in part due to the strong labor market.

Rosengren said U.S. unemployment at 4.4 percent has dropped below its natural equilibrium and could overheat the economy and prompt faster interest-rate hikes if it were to drop below 4 percent. He estimates the “natural employment” level - or the lowest possible level before wage pressures push inflation too high - is roughly 4.7 percent.

He cited a survey in which private economists give a 10 percent chance of unemployment falling below 4 percent.

“Such an overheated economy would likely be accompanied by higher inflation, which in turn would likely elicit higher interest rates,” he said at a commercial real estate conference.