What will the long-term implications be if mortgage giants return to private hands?
President Donald Trump’s suggestion that he could move ahead with ending the conservatorship of government-sponsored enterprises Fannie Mae and Freddie Mac has garnered support from key allies, including those in the labor and housing sectors.
In a Truth Social post Wednesday night, Trump said he was “giving very serious consideration” to moving Fannie and Freddie into the public space, adding that he would consult with cabinet members and make a decision “in the near future.”
Trump, who attempted a similar effort during his first term, stated that both entities are now “doing very well, throwing off a lot of CASH,” and suggested that now might be the right time to act.
Gary LaBarbera, president of the Building and Construction Trades Council of Greater New York and member of the Housing for US coalition, welcomed the statement.
“President Trump made the right decision to answer the call we and many others have made to responsibly release Fannie Mae and Freddie Mac,” he said.
“This decision will yield an estimated $250 billion that should be invested in the American working class. Using the proceeds of this release will provide that solution by kick-starting the largest housing boom in generations.”
Privatization has been a long-standing goal for many Republican lawmakers since the two GSEs were taken under government conservatorship during the 2008 financial crisis. Originally chartered by the government but publicly traded before the crisis, Fannie and Freddie were seized by federal regulators as home prices collapsed, sparking the Great Recession.
Since 2008, the GSEs have been overseen by the Federal Housing Finance Agency (FHFA). The current FHFA director, William Pulte, who took office in March, has stated that any plan to privatize the two mortgage giants would require “significant study” on the impact such a move could have on mortgage rates.
Industry analysts agree that full privatization would be a long and complex process. In a note to clients, TD Cowen housing policy analyst Jaret Seiberg predicted that an actual spin-off would not occur until late 2026 or early 2027, should Trump win re-election.
That may take a few years, according to Seiberg, citing regulatory hurdles and the need for detailed analysis on market implications.
Fannie Mae and Freddie Mac, both government-sponsored enterprises (GSEs), have played a critical role in supporting mortgage liquidity and affordability. They operate by buying home loans from lenders and repackaging them as securities for investors, helping maintain the steady flow of capital that underpins affordable mortgage rates, particularly the 30-year fixed-rate mortgage.
Some economists have expressed concern that moving too quickly to release Fannie and Freddie from federal conservatorship could destabilize mortgage markets and raise borrowing costs for millions of homebuyers.
“Do you want the current system, which isn’t broken, or what is behind door No. 2 and we don’t know what it is?” said Laurie Goodman, founder of the Housing Finance Policy Center at the Urban Institute, in an interview with The New York Times. She warned that a rushed privatization effort could increase mortgage costs and lead to unintended consequences.
Moody’s Analytics chief economist Mark Zandi estimated in 2024 that privatization could add $1,800 to $2,800 per year in borrowing costs for the average mortgage borrower.
Read more: What privatizing Fannie and Freddie might mean for brokers
Stay updated with the freshest mortgage news. Get exclusive interviews, breaking news, and industry events in your inbox, and always be the first to know by subscribing to our FREE daily newsletter.
