Trump's Fannie Mae and Freddie Mac IPO Plan: A Potential Solution for Lower Mortgage Rates?

US President Donald Trump plans to IPO Fannie Mae and Freddie Mac by the end of the year, aiming to raise $30 billion and potentially slash mortgage rates. Hedge fund manager Bill Ackman suggests merging the two government-owned mortgage giants to reduce costs, risks, and oversight, passing savings to consumers in the form of lower mortgage rates.

Title: Trump Administration Eyes IPO for Fannie Mae and Freddie Mac

US President Donald Trump has announced plans to initiate initial public offerings (IPOs) for Fannie Mae and Freddie Mac by the end of the year, aiming to raise approximately $30 billion. The administration is considering two primary options: either a combined IPO or separate IPOs for the two mortgage giants. The potential valuation of these companies is estimated at a combined $500 billion or more [1].

The administration's plans have sparked interest among investors and financial professionals. The over-the-counter shares of Fannie Mae (FNMA) and Freddie Mac (FMCC) have seen significant increases, with Fannie Mae's shares rising by 21% and Freddie Mac's shares jumping by 15% on Friday following the report [1]. The year-to-date performance has been even more impressive, with Fannie Mae's shares up by over 190% and Freddie Mac's shares up by 130% [1].

The proposed IPOs have drawn attention from prominent Wall Street banks, including JPMorgan Chase (JPM), Goldman Sachs (GS), Bank of America (BAC), Citigroup (C), Morgan Stanley (MS), and Wells Fargo (WFC), who have visited Washington, D.C., to discuss the plans with President Trump [1]. The meetings have included Treasury Secretary Scott Bessent, Commerce Secretary Howard Lutnick, and Bill Pulte, director of the Federal Housing Finance Agency, which oversees Fannie and Freddie [1].

The implications of the IPOs are significant for the US housing market. Fannie Mae and Freddie Mac play crucial roles by purchasing mortgages and repackaging them as securities, thereby influencing mortgage rates and availability. Critics and housing experts worry that fully privatizing these firms could increase the perceived risk of their mortgage obligations, potentially raising mortgage rates for homebuyers [1]. However, proponents argue that the government's ownership of Fannie and Freddie was never intended to be permanent, and that the sale could generate billions of dollars for the government [1].

Hedge fund manager Bill Ackman has suggested merging Fannie Mae and Freddie Mac to reduce costs, risks, and oversight, which could pass savings to consumers in the form of lower mortgage rates [3]. The Trump administration is still weighing the options, including the possibility of merging the two entities [3].

The potential IPOs and possible merger of Fannie Mae and Freddie Mac represent a significant shift in the US housing market. The administration's plans are still in the early stages, and many details remain uncertain. As the process unfolds, investors and financial professionals will closely monitor the developments to understand their potential impact on the mortgage landscape.

References
[1] https://finance.yahoo.com/news/trump-administration-says-fannie-and-freddie-will-go-public-by-end-of-year-and-raise-30-billion-172847162.html
[2] https://nationalmortgageprofessional.com/news/report-president-trump-eyeing-ipo-fannie-mae-freddie-mac-year
[3] https://www.newsmax.com/finance/streettalk/bill-ackman-fannie/2025/08/10/id/1221926/