President Donald Trump is “opportunistically evaluating” taking Fannie Mae and Freddie Mac public as early as the end of the year, says Federal Housing Finance Agency (FHFA) chief William Pulte.
“President Trump made the right decision not to take Freddie and Fannie public during his first term and is opportunistically evaluating an offering this time around, which could be as early as the end of 2025,” Pulte wrote in a series of X posts on Oct. 20. (1) “We are focused on running them like a business and taking out costs so I don’t think there’s any limit to what they could be worth one day.” (2)
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Speculation of Trump’s desire to privatize Fannie Mae and Freddie Mac reignited upon his election to a second term. In a Truth Social post back in May, Trump suggested he was “working” on taking the companies public and ending the government’s conservatorship of of the mortgage giants. (3)
Privatization could be a boon for investors and the government, but skeptics believe it would make buying a home more expensive in the midst of a housing affordability crisis. Here’s a look at how taking these companies public might reshape housing in the U.S.
Cleaning house
Fannie Mae and Freddie Mac are both government-sponsored entities and have been under federal conservatorship since the 2008 financial crisis in which they were bailed out. Together, the companies back 70% of the mortgage market, according to The New York Times. (4) So, why take them public?
Depending on the structure of the deal, privatizing could generate billions of dollars in revenue for investors and the administration. Since Trump was elected on Nov. 5, shares of both companies, which are traded over the counter, have climbed more than 700% as of Oct. 20, per Reuters, and now have a combined market value of about $20 billion. (5)
But placing these companies in private hands would also free the government from potential future bailout obligations, adding risk to mortgage loans.
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“It would mean that mortgage rates would increase — definitely,” Laurie Goodman, founder of the Housing Finance Policy Center at the Urban Institute, a think tank in Washington, D.C., told The Times.
Pulte did previously acknowledge to CNN that “it’s critical to ensure any discussion about exiting conservatorship needs not only to ensure safety and soundness but how it would affect mortgage rates.” (6)
Impact on the housing market
Fannie Mae and Freddie Mac don’t directly issue mortgages — rather they buy mortgages from lenders and package them for investors as securities. This maintains cash flow within the mortgage industry, allowing lenders to offer stable, affordable rates, experts say.
And if the federal government no longer backs these entities, their safety net goes with it.
“When the government is backing an entity’s products and services, it helps to reduce risk, especially in the generating of loans,” Alex Beene, financial literacy instructor for the University of Tennessee at Martin, told Newsweek. “Removing it opens the door to higher interest rates for those looking to buy or refinance. It could also lead to more restrictive policies in even getting a loan, as lenders react more cautiously to some buyers.” (7)
Increased rates could affect affordability, particularly for first-time buyers or those with modest incomes already stretched thin by soaring home prices.
As for homeowners with existing mortgages may also be affected if they ever want to refinance their loan. It may be less likely you can reduce your monthly payments if you’re struggling to get by.
The long-term impact of this housing shakeup remain uncertain, however, homebuyers and homeowners could serve themselves well by staying informed so they can navigate potential changes effectively.
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Article sources
We rely only on vetted sources and credible third-party reporting. For details, see our editorial ethics and guidelines.
@pulte (1, 2); @realDonaldTrump (3); The New York Times (4); Reuters (5); CNN (6); Newsweek (7)
This article originally appeared on Moneywise.com under the title: Fannie Mae and Freddie Mac could go public by end of the year, housing chief says — what it could mean for your mortgage
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