National Urban League Pushes to Privatize Fannie Mae, Freddie Mac

Marc Morial, president and CEO of the Urban League, issued a letter to President Donald Trump’s newly confirmed director of the Federal Housing Finance Agency (FHFA), William Pulte, saying he has “the opportunity of a lifetime” to end conservatorship of the government-sponsored enterprises that stretches back to 2008. Morial said proceeds from privatization could be used to fund the construction of homes for working-class families. 

In the letter, Morial noted that Fannie and Freddie are “far stronger” financially than when privatization of the GSEs ended during the 2008 Global Financial Crisis and have “paid back every dime” they were given as a bailout along with an additional $100 billion. The GSEs are now armed with $150 billion in capital, nearly four times the amount held prior to the GFC, according to Morial, and he urged the FHFA to revive privatization efforts that initially began in 2019 during Trump’s first term in the White House. 

“Given these improvements, and by ensuring the existing Treasury Department backstop for the GSEs remains in place, we believe privatization will have minimal impact on mortgage rates,” Morial said in his letter. “We are eager to work with you on an effort to supercharge the construction of much-needed housing in America through the transition of Fannie and Freddie.”

Fannie Mae (FNMA) and Freddie Mac (FMCC) both buy mortgages from lenders in an effort to stabilize the housing industry and help make U.S. homes more affordable. Sales of the mortgages provide liquidity into the financial system and allow banks and mortgage companies to engage in more lending.

Scott Turner, secretary of the U.S. Department of Housing and Urban Development, said in early February after confirmation by the U.S. Senate that he plans to prioritize privatization of Fannie and Freddie in coordination with the FHFA, which regulates the GSEs. 

A possible end to conservatorship of Fannie and Freddie is occurring on the heels of both GSEs mapping out plans late last year to tighten underwriting standards for multifamily properties as part of efforts to crack down on loan fraud. 

Officials for the FHFA did not immediately return a request for comment.

Andrew Coen can be reached at acoen@commercialobserver.com