If they’re too big to fail, can they be broken up into regional agencies?
There is no need to break them up and remake them because there is no need for these Great Depression era FDR-created GSE services to begin with - they only distorted the normal housing/mortgage market and have been privatizing profits while socializing the risk / liabilities / losses.
Fannie and Freddie aren't Too Big To Fail (TBTF) - they are Too Big To Succeed (TBTS). So is the rest of the Big Government (e.g., look at Greece and the PIIGS of EU).