In this paper, we propose a rateless, three-stage, two-way multiply-and-forward (MF) relaying system over the Rayleigh flat fading channel, where two source nodes communicate with each other through a relay node and all nodes work on half-duplex and time-division mode. We thoroughly analyze the signals during all three stages in the proposed MF system and derive the closed-form symbol error rate (SER) expressions for an uncoded MF-two-way relay network (MF-TWRN). Furthermore, we provide the equivalent point-to-point fading channel model, which is employed to carry out the asymptotic performance analysis. We finally put forth an optimization model for the MF-TWRN with fountain codes. Simulation results show that our optimized degree distribution can provide outstanding performance for the MF-TWRN compared to those in the literature.