US president reassures markets GSEs will remain under federal oversight amid privatization talks
US president Donald Trump has vowed to maintain the federal government's mortgage guarantees and oversight responsibilities for Fannie Mae and Freddie Mac as he works to transition the government-sponsored enterprises (GSEs) toward public ownership.
"I am working on TAKING THESE AMAZING COMPANIES PUBLIC, but I want to be clear, the U.S. Government will keep its implicit GUARANTEES, and I will stay strong in my position on overseeing them as President," Trump said in a post on Truth Social.
Fannie Mae (Federal National Mortgage Association) and Freddie Mac (Federal Home Loan Mortgage Corporation) have operated under government conservatorship since being bailed out during the 2008 financial crisis. While they are now profitable and operate as for-profit companies with private shareholders, the US Treasury still holds preferred shares and warrants representing about 80% of their common stock.
— Pulte (@pulte) May 27, 2025
The prospect of privatization has energized investors, causing shares in both GSEs to surge last week following Trump’s earlier comments about exploring a public offering.
“This at least takes off the table one of the scenarios that investors had really worried about,” Tracy Chen, portfolio manager at Brandywine, told Bloomberg.
However, the president’s explicit support for retaining government guarantees addresses a concern about whether privatization could strip Fannie and Freddie of their status as implicitly backed by the federal government.
Mortgage professionals and investors in the $9 trillion agency mortgage-backed securities (MBS) market have warned that losing this guarantee could push yields, and ultimately mortgage rates, higher. The government’s oversight has traditionally underpinned the perceived safety of agency bonds, helping keep borrowing costs down for millions of American homebuyers.
Gary LaBarbera, president of the Building and Construction Trades Council of Greater New York and member of the Housing for US coalition, urged the Treasury Department to ensure additional guardrails are put in place to avoid a financial crisis similar to the late 2000s.
“President Trump's pledge to keep the implicit guarantee in place for Fannie and Freddie when they are released from conservatorship will help ensure mortgage rates remain stable. But to make sure we never need that guarantee or another bailout, the Treasury Department should put guardrails around Fannie and Freddie so they never chase excessive profit through risky mortgages like they did in the mid-2000s and keep the existing cash backstops in place.
“Just as important, let’s use the proceeds from privatizing Fannie and Freddie to build millions of new homes across America for the forgotten middle class.”
Read next: Industry reacts to Trump's plans for bringing GSEs public
Bill Pulte, head of the Federal Housing Finance Agency (FHFA), echoed the importance of a cautious approach in February, stating that any release from conservatorship must be “carefully planned” to ensure the housing finance system remains stable and mortgage rates aren’t adversely affected.
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