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President Donald Trump on Wednesday said he soon planned to decide whether to privatize Fannie Mae and Freddie Mac, the government-sponsored entities that help provide stability and affordability to America’s home mortgage market. “I am giving very serious consideration to bringing Fannie Mae and Freddie Mac public,” Trump posted on his social media website, Truth Social, on Wednesday, saying he would consult with cabinet members and make 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,” the post said. But at a time when mortgage rates remain stubbornly high and home prices keep climbing, some economists have warned that attempts at privatizing Fannie and Freddie could upset the balance in the mortgage market, making it even more expensive for Americans to borrow money to purchase a home. Many of Trump’s allies in the Republican Party have long advocated for ending the government conservatorship that Fannie and Freddie were placed under after their role in the 2008 global financial crisis. Government control of the two entities was intended to be temporary. In fact, Trump attempted to untangle Fannie and Freddie from US government control in 2019 during his first administration and failed. Fannie and Freddie essentially grease the wheels of America’s home lending market by buying mortgages from lenders and repackaging them for investors. This helps enable a reliable flow of money, allowing mortgage lenders to offer more affordable mortgage rates to would-be homebuyers. Many experts credit the two entities with helping to prop up the 30-year fixed-rate mortgage, the most popular type of home loan in the US due to its relatively low monthly payments compared to shorter-term loans. Before 2008, Fannie and Freddie were private companies, backed by the US Treasury – though both were originally created by the government. They were placed under government control on September 7, 2008, after facing massive losses amid crashing home values that ignited the Great Recession. A week later, Lehman Brothers collapsed, sparking a global financial crisis. Privatizing Fannie and Freddie could spook the investors who buy up mortgage loans, leading them to demand a higher return for their investments and pushing up mortgage rates, experts warn. Mark Zandi, chief economist at Moody’s Analytics, estimated in 2024 that privatization could cost the typical American taking out a new mortgage between $1,800 and $2,800 per year. Fannie and Freddie are currently controlled by the Federal Housing Finance Agency (FHFA), which has been run by William Pulte since his confirmation in March. At that time, Pulte told CNN that any effort to privatize Fannie and Freddie would need to include “significant study” on what the effort might do to mortgage rates. That may take a few years. In a note to clients on Wednesday, TD Cowen financial services and housing policy analyst Jaret Seiberg said he did not expect the Trump administration to attempt a spin-off until late 2026 or early 2027.
