CNN
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Bill Pulte, who was confirmed by the US Senate on Thursday to lead the Federal Housing Finance Agency for the Trump administration, said he’s in no rush to privatize Fannie Mae and Freddie Mac, the mortgage behemoths that power more than half of America’s mortgages.
“Fannie and Freddie shouldn’t be in conservatorship forever,” Pulte told CNN on Thursday. “But it’s critical to ensure any discussion about exiting conservatorship needs not only to ensure safety and soundness but how it would affect mortgage rates.”
In 2019, Trump’s first administration tried — and failed — to wrest Fannie and Freddie from the government conservatorship that’s been in place since the 2008 financial crisis. Many of Trump’s allies in the Republican Party have long advocated for ending the conservatorship, which was always intended to be temporary.
America’s housing market today faces elevated borrowing rates, a supply shortage and near-record high home prices. Some experts have warned that efforts to privatize Fannie and Freddie could disturb mortgage markets, making it more expensive for Americans to borrow money to purchase a home.
Though mortgage rates have fallen below recent highs, they still remain elevated compared to recent history. The average 30-year fixed mortgage rate was 6.65% for the week ending on Thursday, according to Freddie Mac.
Pulte, whose grandfather founded the nation’s third-largest homebuilder, PulteGroup, said that privatizing the two companies is not the Trump administration’s top priority this time around. Pulte stressed that any effort to spin off Fannie and Freddie would need to include “significant study” on what the effort might do to mortgage rates.
What do Fannie and Freddie do?
Fannie and Freddie were brought under government control after the 2008 housing crisis to stabilize the housing market. Many experts credit the two companies’ ability to operate effectively with propping up the 30-year-fixed mortgage, the most popular home loan type in the US.
Fannie and Freddie don’t directly issue mortgages to borrowers. Instead, the two government-sponsored enterprises, or GSEs, buy mortgages from lenders and repackage them for investors. This helps enable a reliable flow of money, allowing mortgage lenders to offer more affordable rates to would-be homebuyers.
Privatization efforts risk spooking investors without assurances that the government would bail out Fannie and Freddie in a crisis like in 2008, experts say. Investors who buy up the loans may demand higher rates to compensate.
The government’s stake in the two mortgage giants has been profitable. The combined net worth of Fannie and Freddie was $147 billion as of the third quarter of 2024, according to JPMorgan. That means the US government’s majority stake in the two GSEs is worth billions of dollars.
“These are great assets for the American taxpayer right now and they can be even bigger assets for the American taxpayer,” Pulte said.
Pulte, who was confirmed by the US Senate by a vote of 56-43, said his main focus as FHFA director will be to root out fraud in the two companies and ensure they are running efficiently.
“They’re safe and sound within reason,” Pulte said of Fannie and Freddie. “There are opportunities to strengthen the safety and soundness of Fannie Mae and Freddie Mac.”
