President Donald Trump has begun his second term. All week, Inman is diving into the administration’s housing policies — from dismantling HUD to mounting antitrust issues. Read the first story in the series HERE, the second HERE, and join us Friday for part five, outlining his plans for antitrust regulations.
Sixteen years after being placed into a conservatorship, Fannie Mae and Freddie Mac seem to be closer than ever to privatization.
Days ahead of his Inauguration, President Trump nominated private equity CEO and philanthropist Bill Pulte to head the Federal Housing Finance Agency.
The FHFA is responsible for the overall management of the two government-sponsored enterprises and has the powers of the management, boards, and shareholders, according to the agency’s website. However, it seems Fannie and Freddie no longer need FHFA’s governance, as both corporations have posted more than 20 consecutive quarters of positive results.
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Bill Pulte | Credit: X
The Pulte Capital Partners LLC founder has yet to share his plans for the FHFA, which will likely emerge during confirmation hearings. But the mortgage industry appears to be open to Pulte’s ideas and how he’ll guide Fannie and Freddie out of conservatorship.
“While Bill isn’t well known in Washington, we worked together in Detroit and I can say firsthand he is passionate about affordable housing and community development, as well as deeply knowledgeable about the housing market and homebuilding industry,” National Housing Conference CEO David Dworkin said last week.
“When Detroit was at its lowest point during the bankruptcy in 2013, Bill came home to work in communities hardest hit by the foreclosure crisis. I expect he will be an important voice in the Trump Administration’s efforts to bring down the cost of homeownership and make all housing more affordable.”
Pulte, if confirmed, won’t work alone on privatizing Fannie and Freddie. He’d work alongside Scott Bessent, who’s awaiting the results of his Jan. 16 confirmation hearing. Bessent hasn’t provided specifics on his plans for the corporations; however, Sen. Elizabeth Warren, D-MA, has asked the nominee to answer 17 questions about Fannie and Freddie’s future, including Congressional involvement in the privatization process and the conditions both corporations must meet before getting the OK.
Although the exact strategy is still fuzzy, experts say one thing is clear: there’s a lot at risk.
“Privatizing the GSEs, if pursued, would be a massive and complex project that would take multiple years and likely require coordination among all three branches of government,” asset management firm DoubleLine’s latest analysis read. “While privatization has significant risks and unclear political or economic upside relative to the status quo, it is certainly possible, and there is a good chance parts of it will be attempted at some point by the incoming administration, which might be a catalyst for sporadic volatility in the Agency mortgage-backed securities market.”
A brief look back
Government-sponsored enterprises Fannie Mae and Freddie Mac have been under conservatorship since 2008. Then-Treasury Secretary Henry Paulson and then-FHFA Director James Lockhart announced the GSE’s conservatorship in September of that year, noting Fannie and Freddie — whose business model relies on purchasing loans from banks and selling them as mortgage-backed securities — were drowning in $5.4 trillion of debt resulting from the subprime mortgage crisis.
The conservatorship has allowed Fannie and Freddie to remain private; however, the government took an ownership stake of 79.9 percent in each firm, according to a 2008 Inman report. The conservatorship allowed Fannie and Freddie to remain solvent, with the goal of streamlining their portfolios and increasing operational efficiency.
Fannie and Freddie’s financials have since done a 180 from the Great Recession, with the GSE’s latest earnings reports reflecting a combined net worth of $147 billion. The talk of Fannie and Freddie exiting conservatorship rose to a fever pitch in 2019, after the FHA released a memo recommending they could successfully operate without the government charter. However, five years later, Freddie and Fannie have yet to exit conservatorship.
President-elect Trump has promised to fast-track Fannie and Freddie’s journey back to private status, after failing to do so during his first term. According to a previous Inman article, Trump got close to privatizing the GSEs in 2020; however, his election loss made room for Democrats to can the plan.
Not if, but when and how
The Wall Street Journal reported in September that Trump started building a plan to privatize Fannie and Freddie in early 2024 with the help of former National Economic Council director Larry Kudlow and former White House Presidential Personnel Office Director John McEntee. WSJ didn’t name which banks were involved in the planning process.
Before the election, Trump’s plan to privatize, or in his words “recapitalize,” the GSEs relied on bypassing Congress using the FHA to free the firms from their conservatorship. Another option, according to a previous Inman article, was using the Treasury Department to partially buy Fannie and Freddie loans.

Michael Fratantoni
The election results, which yielded Republican majorities in the House (215-220) and Senate (47-53), means Trump will have an easier time getting Congressional support for this plan. However, Mortgage Bankers Association Chief Economist Mike Fratantoni said even with Congressional support, it could take the majority of Trump’s second term to take Fannie and Freddie private.
“Private investors would have at least the majority if not all the shares of those companies. That’s going to be a long process,” Fratantoni told Mortgage Professional America Magazine last month. “The US Treasury has invested hundreds of billions of dollars in these companies and to exit from those positions is going to take some time if they want to do it in a way that doesn’t disrupt the smooth functioning of the market.”
“It’s a six-trillion-dollar-plus market, so you don’t want to mess this up,” he added. “You want to do it very cautiously and methodically. And the downside of getting it wrong is really extraordinarily risky.”
As with several other Trump policies, it’s unclear if this plan is more bark than bite. When asked for additional details about privatizing Fannie and Freddie, Trump-Vance transition spokesperson Karoline Leavitt told CNN, “No policy should be deemed official unless it comes directly from President Trump.”
What privatization could mean for borrowers
If this plan ends up being something that Trump’s serious about, there’s a broad consensus that privatizing Fannie and Freddie will lead to higher costs for borrowers.
During her campaign, Vice President and Democratic presidential nominee Kamala Harris said privatizing the GSEs could add $1,200 per year in interest costs for homebuyers. PolitiFact researched Harris’s claim, which was based on Moody’s Analytics and the Urban Institute’s 2015 joint study, “Privatizing Fannie and Freddie: Be Careful What You Ask For.”

Mark Zandi | Credit: X
Study co-author Mark Zandi said the study examined what would happen if Fannie and Freddie were moved out of conservatorship through recapitalization and release. The study said restructuring the GSE’s debt and privatizing them would cause mortgage rates to rise 43 to 97 basis points — or almost 1 percent (100 basis points = 1 percent).
“In its calculation, the Harris campaign said it split the difference and factored in a 70 basis point increase in mortgage rates,” PolitiFact said. “They used the average mortgage balance in 2023 — $244,498, according to Experian — and the effective interest rate on mortgage debt (3.8 percent) at the end of 2023. Mortgage payments at a 3.8 percent rate would be $1,139 per month. If that rate rose to 4.5 percent, those payments would increase to $1,239 a month. That extra $100 per month would mean consumers would pay $1,200 more annually in mortgage payments.”
Zandi said the paper’s findings would likely hold up in today’s market, meaning Harris’s estimation isn’t farfetched.
Several other experts PolitiFact spoke to agreed that privatization would lead to higher costs for borrowers; however, they said the final result is based on a long list of variables that we don’t have answers to just yet, such as the financial and regulatory terms of a deal to privatize Fannie and Freddie. Depending on the method, the additional costs could be negligible or could be enough to send homeownership rates into a nosedive.
A 2020 Congressional Budget Office (CBO) report said a deal that “emphasized more private capital and a lower federal guarantee for mortgages” would lead to slightly higher interest rates. However, the CBO said home prices would likely slightly come down as well — meaning that borrowers, on the whole, could come out breaking even.
Meanwhile, a previous U.S. Department of Housing and Urban Development (HUD) commissioned study said privatization could have a devastating effect on “African Americans, lower-income households, and those living in central cities” who depend on government-backed loans.
Even if Trump decides to forgo the challenge of privatizing Freddie and Fannie, Wharton School of the University of Pennsylvania professor Susan Wachter said now is the time to decide on the best path forward.
“The law says they are eventually to be privatized,” she told CNN. “But the stakes are very, very high as to how this is carried out.”
Additional reading:
- Investors betting Trump will privatize Fannie Mae, Freddie Mac
- Falling rates help boost Fannie and Freddie loan volumes, net worths
- Fannie and Freddie aren’t going private anytime soon, Mark Calabria says
- The Trump administration’s new plan to privatize Fannie Mae and Freddie Mac, explained (2019)
- Effects of Recapitalizing Fannie Mae and Freddie Mac Through Administrative Actions