Fannie Mae and Freddie Mac's path to privatization faces hurdles under Trump's leadership

President Donald Trump is pushing to free mortgage giants Fannie Mae and Freddie Mac from government conservatorship, but the process is complex. The two companies entered conservatorship during the 2008 financial crisis. Trump's plan aims to end government control and allow private companies to buy and sell the companies, but it faces obstacles and opposition from lawmakers and regulators.

President Donald Trump is pushing to free mortgage giants Fannie Mae and Freddie Mac from government conservatorship, but the process is complex. The two companies entered conservatorship during the 2008 financial crisis. Trump's plan aims to end government control and allow private companies to buy and sell the companies, but it faces obstacles and opposition from lawmakers and regulators [1].

Fannie Mae and Freddie Mac have been under federal conservatorship since 2008 following the financial crisis, during which both entities became insolvent amid the subprime mortgage meltdown [2]. Trump met the CEOs of Citigroup and Bank of America earlier this week to discuss the administration's plans to privatize Fannie Mae and Freddie Mac [3].

The administration is aiming for the initial public offerings (IPOs) of Fannie Mae and Freddie Mac later this year, with plans to value the companies at roughly $500 billion or more combined, and could fetch $30 billion for the administration [2]. An IPO would return Fannie and Freddie to their pre-2008 state, when they were publicly traded companies backed by the US Treasury.

However, the process is not without its challenges. Critics have warned that attempts to privatize 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 [1]. 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 [1].

Moreover, Fannie and Freddie have enormous backing from hedge fund investors, so much of the proceeds of an IPO would go to wealthy financial backers, not taxpayers [1]. The companies guarantee 70% of America’s mortgages, and although they don’t issue mortgages to borrowers, they help ensure America’s housing market functions properly by buying mortgages from lenders and repackaging them for investors [1].

The White House believes an initial public offering of up to 15% of the two companies’ shares could raise $30 billion, which could make it the largest IPO in history [1]. However, the plans have not yet been finalized, and Trump continues to weigh various options [1].

In conclusion, Trump's push to free Fannie Mae and Freddie Mac from government conservatorship is a complex process that faces significant challenges. While the potential benefits of privatization are clear, the risks and opposition from lawmakers and regulators must also be taken into account.

References:
[1] https://www.cnn.com/2025/08/08/business/fannie-freddie-ipo
[2] https://nypost.com/2025/08/08/business/trump-aiming-for-ipos-of-fannie-mae-freddie-mac-this-year-report/
[3] https://www.reuters.com/business/trump-aiming-ipos-fannie-mae-freddie-mac-this-year-wsj-reports-2025-08-08/