Bigger. Better. Bolder. Inman Connect is heading to San Diego. Join thousands of real estate pros, connect with the Inman Community, and gain insights from hundreds of leading minds shaping the industry. If you’re ready to grow your business and invest in yourself, this is where you need to be. Go BIG in San Diego!
Shares in mortgage giants Fannie Mae and Freddie Mac soared Thursday after President Trump posted on his social media platform, Truth Social, that he’s giving “very serious consideration” to “bringing [both companies] public.”
Fannie and Freddie are already publicly traded on an over-the-counter market. But investors interpreted Trump’s comments to mean that the federal government will soon put forward a plan to restructure the companies — perhaps generating a windfall for the government and existing investors in the process.
TAKE THE INMAN INTEL INDEX SURVEY FOR MAY
There’s been talk that the government could invest its stake in Fannie and Freddie into a sovereign wealth fund that would provide investors who fund most home loans reassurance about continued government backing.
Treasury Secretary Scott Bessent has endorsed the idea of creating a U.S. sovereign wealth fund, and acknowledged in March that the government’s stakes in Fannie and Freddie — which the Congressional Budget Office estimates are worth about $270 billion — is one of a number of government assets that could fund it.
One way the Trump administration could monetize its stake in Fannie and Freddie would be to buy out public common shareholders — including billionaire Bill Ackman — and then issue preferred shares that pay dividends, Whalen Global Advisors LLC Chairman Christopher Whalen told Yahoo Finance.
That plan would leave the U.S. as the sole voting shareholder of Fannie and Freddie, and “give Treasury all the cash they need,” Whalen said.
“I think it’s very likely, because they need the money,” Whalen Global Advisors chairman Chris Whalen says on a potential public offering of Fannie Mae & Freddie Mac. pic.twitter.com/rgnC8dJwrq
— Yahoo Finance (@YahooFinance) May 22, 2025
“The reason they’re talking about this is they need the cash in order to make their tax cuts and their budget reconciliation bill work,” Whalen said.
An industry veteran, whose past experience includes senior research positions at Kroll Bond Rating Agency and Carrington Holding Co., Whalen has connections at Fannie Mae and Freddie Mac.
Trump said he’ll be speaking to Bessent, Secretary of Commerce Howard Lutnick, and Bill Pulte, whom he appointed to oversee Fannie and Freddie’s federal regulator, “making a decision in the near future.”
“Fannie Mae and Freddie Mac are doing very well, throwing off a lot of CASH, and the time would seem to be right,” Trump posted Wednesday.
Hoping for a plan like the one laid out by Whalen, investors bid common shares in Fannie Mae and Freddie Mac up by more than 40 percent Thursday, to new 52-week highs. Preferred shares in Fannie and Freddie, which were delisted in 2010 but still trade over the counter, posted more modest double-digit gains.
The grandson of PulteGroup Inc. founder William J. Pulte, Bill Pulte in March appointed himself the chairman of Fannie Mae and Freddie Mac’s boards in a purge in which 14 board members were removed from their positions.
Banker, investor and lawyer Omeed Malik — dubbed “MAGA world’s premier financier” and a “close friend” of Donald Trump Jr. by New York Magazine — joined Fannie Mae’s board in April.
Democrats, including Sen. Elizabeth Warren, questioned the legality of Pulte’s purge of Fannie and Freddie’s boards. They’ve been keeping an eye on the administration’s plans for the mortgage giants, and some are wary of plans to create a sovereign wealth fund and the Trump family’s crypto investments.
The challenge for presidents who have tried to release Fannie and Freddie from conservatorship in the past — including Barack Obama and Trump in his first term — is how to restructure the companies to not only shield taxpayers from risk, but protect homebuyers from paying higher mortgage rates.
“My fundamental concern is that without a well-defined vision, exit from conservatorship could cause havoc in financial markets and in the U.S. housing market,” the Urban Institute’s Laurie Goodman wrote in an April analysis. “And I do not believe there is any consensus on what this vision should be.”
Real estate industry groups like the National Association of Realtors the Mortgage Bankers Association have proposed a “utility-style” model for Fannie and Freddie that preserves their mandate to support affordable housing.
Fannie and Freddie have been in government conservatorship since 2008, when the Bush administration determined they needed to be bailed out, with the government taking a large stake in the companies to keep them afloat during the 2007-2009 housing crash and Great Recession.
During Trump’s first term as president, his administration laid the groundwork for releasing Fannie and Freddie from government conservatorship but were, ultimately, unable to finish the jobs.
One important step taken was the first Trump administration’s decision in 2019 to discontinue the Treasury’s “sweeps” of Fannie and Freddie’s profits, which allowed the companies to begin rebuilding their net worths, which totalled $161 billion as of March 31.
Fannie and Freddie rebuilding net worth
Source: Fannie Mae and Freddie Mac earnings reports.
Goodman estimates that Fannie and Freddie are about $132 billion short of the net worths they would need to meet the capital requirements Congress has mandated for privatization — a problem the Trump administration wouldn’t have to deal with if it buys out common shareholders, as proposed by Whalen.
Fannie and Freddie don’t make loans themselves, but protect investors who buy mortgage-backed securities (MBS) from losses. The guarantees Fannie and Freddie provide to MBS investors make mortgages a safe bet for institutional investors who are willing to accept modest returns that keep borrowing costs low.
Together, the companies were guaranteeing payments to investors on $6.74 trillion in single-family mortgages as of March 31. When times are tough, defaults on those loans can take a heavy toll on Fannie and Freddie’s bottom lines.
But in good times, the companies generate big profits that have helped them repay a $191 billion taxpayer bailout. The guarantee fees that the companies charge lenders helped the companies generate combined 2024 profits of $28.9 billion.
Get Inman’s Mortgage Brief Newsletter delivered right to your inbox. A weekly roundup of all the biggest news in the world of mortgages and closings delivered every Wednesday. Click here to subscribe.
