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The Trump administration is preparing to reduce the government’s holdings in Fannie Mae and Freddie Mac, a step toward unwinding more than a decade of federal control over the two mortgage-finance companies that underpin much of the U.S. housing market.
Federal Housing Finance Agency Director Bill Pulte said Tuesday the government plans to sell about 5% of its stake in the companies through a public offering. The move, he said, could be executed this year and would represent the first meaningful transfer of ownership since the firms were placed under federal conservatorship during the 2008 financial crisis.
Speaking in a televised interview with Fox Business, Mr. Pulte estimated the government’s total stake in Fannie and Freddie to be valued between $500 billion and $700 billion. “We’re in no rush,” he said. “The president holds all the cards, so he’ll decide what to do and when to do it. I think we’re looking at about 5%, and I think it will be very oversubscribed.”
Shares of both government-sponsored enterprises rose on the news, extending recent gains fueled by investor speculation that the administration was preparing an exit strategy. In late morning trading, Fannie Mae shares advanced 0.7% while Freddie Mac climbed 2.3%.
A Long Road Out of Conservatorship
The Treasury Department seized control of the mortgage giants in September 2008, amid mounting losses tied to the subprime mortgage collapse. Since then, the firms have operated under government oversight, sending the bulk of their profits to the U.S. Treasury. Together, they back roughly half of the nation’s $12 trillion mortgage market, providing critical liquidity to lenders and stability to borrowers.
Multiple administrations have considered ways to return the firms to private ownership, but efforts have stalled amid concerns that a hasty exit could disrupt mortgage availability or raise borrowing costs for millions of Americans.
Trump’s Push and Market Tensions
President Trump has made clear his desire to reduce the government’s footprint in housing finance, a priority that aligns with Wall Street’s long-running push for clarity on the future of Fannie and Freddie. According to people familiar with the matter, Mr. Trump recently met with a group of senior bank executives to solicit ideas on how best to monetize the government’s stake.
But the path forward is far from smooth. Lawmakers on both sides of the aisle have voiced skepticism about a public share sale, arguing that shrinking the government’s role could lead to higher mortgage rates and reduced access to affordable housing. Democrats in particular have warned that privatization risks reviving the vulnerabilities that contributed to the financial crisis.
Investors See Opportunity
For investors, the offering represents both risk and opportunity. A successful sale could signal momentum toward a broader recapitalization of the companies, which some analysts say would unlock significant value for shareholders. At the same time, uncertainty about how much control the government ultimately intends to retain—and what capital standards the firms will face—continues to hang over the stocks.
Still, Mr. Pulte struck an optimistic tone, predicting strong demand for the offering. “We think it will be very oversubscribed,” he said, suggesting that private investors remain eager to gain exposure to the firms despite political headwinds.
The administration’s announcement marks one of the most tangible steps in years toward reshaping the future of the government-sponsored enterprises. Whether it becomes a turning point in their long path out of conservatorship will depend on how Washington balances investor appetite with the political sensitivities of America’s housing market.
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