Trump Announces Plan To Take Fannie Mae, Freddie Mac Public
The move could generate more than $300 billion for the U.S. government but carries the risk of increasing mortgage rates for American households
By Brian Pascus May 22, 2025 1:33 pm
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After more than a decade of government control, Fannie Mae and Freddie Mac could be taken public by the Trump administration.
On Wednesday, President Donald Trump announced in a Truth Social Post that he’s giving “very serious consideration” to working with Treasury Secretary Scott Bessent and Commerce Secretary Howard Lutnick on sending the agency mortgage giants into the public markets.
“Fannie Mae and Freddie Mac are doing very well, throwing off a lot of CASH, and the time would seem to be right,” Trump wrote. “Stay tuned!”
Freddie Mac, or the Federal Home Loan Mortgage Corporation (FHLMC), and Fannie Mae, the Federal National Mortgage Association, are government-sponsored enterprises that buy residential mortgages from lenders and package them into mortgage-backed securities that are sold to investors — in turn, creating the opportunity for more liquidity, and more housing loans, to proliferate through the financial system.
Both Freddie and Fannie are overseen by Bill Pulte, the director of the Federal Housing Finance Agency.
The blockbuster suggestion by Trump carries both risks and rewards.
Bloomberg reported Thursday that Santander strategist Steven Abrahams suggested that a public offering of both GSE’s could fetch $382 billion and make it among the largest initial public offerings ever brought to market. Pershing Square Capital Management CEO Bill Ackman, an investor in both entities, has also suggested the federal government could earn upwards of $300 billion on any IPO of the entities.
However, it’s unclear what would happen to the nation’s housing market itself if Fannie and Freddie no longer have the foundational backing of the U.S. government behind them.
The investors that Fannie and Freddie rely on to purchase their mortgage-backed securities might flee, or pull back their involvement, due to the lack of a solid government backstop, in turn causing yields on those same bonds to rise, in order to re-attract investors, thus potentially driving mortgage rates even high for average Americans across the nation.
The 30-year fixed mortgage rate currently stands at 6.92 percent, and reached a 22-year high of 7.79 percent in October 2023.
As recently as December 2020, the 30-year stood at 2.71 percent.
There’s also the appearance that the Trump administration is seeking to take Fannie and Freddie public to generate a one-time boon to pay for its potential tax cut legislation.
The bill passed the House of Representative by one vote on Thursday, and is expected to add nearly $4 trillion to the nation’s debt over the next 10 years. The bill still needs to be passed by the Republican controlled Senate.
Brian Pascus can be reached at bpascus@commercialobserver.com
