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President Donald Trump‘s administration is gearing up to sell stock in government-backed mortgage giants Freddie Mac and Fannie Mae within months, according to a report on Friday.
The initial public offering could net the Trump administration roughly $30 billion, reported the Wall Street Journal, citing people familiar with the matter.
The plan could see both companies valued at $500 billion or more combined and entail selling between 5% and 15% of their stock.
It is not immediately clear whether Freddie Mac and Fannie Mae will launch separate IPOs or a joint one.
Realtor.com® has contacted the White House, Freddie Mac, and Fannie Mae for comment.
A plan months in the making
The news comes just months after Trump revealed that he was “giving very serious consideration” to the idea of taking Freddie Mac and Fannie Mae public.
“Fannie Mae and Freddie Mac are doing very well, throwing off a lot of CASH, and the time would seem to be right. Stay tuned!” Trump wrote on Truth Social in May.
Days later, the president fired off a follow-up post insisting the companies would retain federal guarantees under whatever new status they attain.
“I am working on TAKING THESE AMAZING COMPANIES PUBLIC, but I want to be clear, the U.S. Government will keep its implicit GUARANTEES, and I will stay strong in my position on overseeing them as president,” Trump vowed.
Freddie Mac and Fannie Mae, whose mission is to buy mortgages from lenders and bundle them into securities for investors to boost the availability of funds for home loans, have been under government conservatorship for more than 15 years, ever since they had to be bailed out with taxpayer dollars to avoid collapse during the financial crisis of 2008.
As part of this arrangement, both companies have been subjected to strict oversight and regulation by the Federal Housing Finance Agency.
It is unclear whether the companies will remain under government auspices in the event of a share offering. FHFA Director Bill Pulte has previously floated the idea that the conservatorship could continue, but he did not offer any details on the logistics of such a plan, reported the Journal.
What it could mean for the housing market
If the IPO deal goes through later this year as discussed, it could mark a seismic shift in housing finance, says Realtor.com senior economist Jake Krimmel—although it’s not without risk.
Historically, the long-standing assumption of an inherent government guarantee has kept mortgage rates low and helped ensure access to mortgage credit for borrowers across income levels.
Krimmel warns that if the IPO ends up undermining the market’s belief that the government continues to stand firmly behind Fannie and Freddie, mortgage costs could surge and access to credit could tighten, especially in times of economic downturn.
At this stage, a couple of key questions remain: Will there be an explicit federal backstop or regulatory mechanisms to replicate it? How will capital requirements be tweaked to balance financial resilience with the mortgage companies’ affordability mission?
“The upshot is that Fannie Mae and Freddie Mac play a central role in keeping the mortgage market liquid and stable,” stresses Krimmel. “Their presence helps extend access to credit and, more broadly, they are essential to supporting homeownership across the country.”