Trump Proposes Bold Move to Privatize Mortgage Giants

Trump’s plan to privatize Fannie Mae and Freddie Mac could unleash a $250 billion windfall for the government while potentially hiking mortgage costs for everyday Americans by thousands annually.

Key Points

President Trump announced he’s “giving very serious consideration” to privatizing mortgage giants Fannie Mae and Freddie Mac, potentially ending their 16-year government conservatorship.
The privatization could generate over $250 billion for the federal government while removing $8 trillion in liabilities from government books.
Economists warn the move could increase mortgage rates, with Moody’s Analytics estimating new borrowers could pay $1,800-$2,800 more annually.
Shares of both entities surged over 40% following Trump’s announcement on Truth Social.

Big Government’s Grip on the Mortgage Market May Finally End

After 16 long years of government control following the 2008 financial crisis, President Trump is considering a bold move to return Fannie Mae and Freddie Mac to the private sector. These mortgage giants, which support roughly 70% of all U.S. mortgages, have been under government conservatorship since September 2008, when they nearly collapsed during the housing market meltdown. Trump’s announcement signals a potential return to free-market principles in one of America’s most critical financial sectors.

The President made his intentions clear on Truth Social, stating, “I am giving very serious consideration to bringing Fannie Mae and Freddie Mac public.” He noted that both entities are “doing very well, throwing off a lot of CASH, and the time would seem to be right.” This move aligns with long-standing Republican objectives to reduce government involvement in the mortgage market while potentially generating significant revenue for the Treasury.

Financial Windfall vs. Homebuyer Concerns

The privatization plan offers significant financial advantages for the federal government. Analysts suggest the sale could generate over $250 billion in revenue while simultaneously removing approximately $8 trillion in liabilities from government books. This financial windfall would arrive at a perfect time to support Trump’s proposed tax cuts and budget reconciliation bills, providing fiscal ammunition for his economic agenda without adding to the national debt.

“I think it’s very likely because they need the money,” said Chris Whalen, a banking analyst quoted by the New York Post regarding the motivation behind the privatization plans.

However, the fiscal benefits come with potential costs for everyday Americans. Economists warn that privatizing these entities could disrupt the mortgage market, potentially increasing borrowing costs for homebuyers who are already struggling with high housing prices. Moody’s Analytics estimates that privatization could cost new mortgage borrowers between $1,800 and $2,800 annually—a significant burden for middle-class families trying to achieve the American dream of homeownership.

Market Response and Implementation Timeline

Wall Street has responded enthusiastically to Trump’s announcement, with shares in both Fannie Mae and Freddie Mac surging by over 40%. This market reaction demonstrates investor confidence in the potential profitability of these entities once freed from government control. The entities’ strong financial performance makes the timing opportune from a market perspective, though implementation remains complex.

“I am giving very serious consideration to bringing Fannie Mae and Freddie Mac public,” the president wrote on his social-media platform Truth Social. “I will be speaking with Treasury Secretary Scott Bessent, Secretary of Commerce Howard Lutnick, and the Director of the Federal Housing Finance Agency, William Pulte, among others, and will be making a decision in the near future.”

Despite the enthusiasm, Trump’s administration has signaled caution about potential impacts on mortgage rates. Treasury Secretary Scott Bessent emphasized, “The priority for a Fannie and Freddie release, the most important metric that I’m looking at, is any study or hint that mortgage rates would go up.” This prudent approach acknowledges the delicate balance between government fiscal interests and the needs of American homebuyers.

Analysts don’t expect any privatization to be completed before late 2026 or early 2027, as the process requires extensive study and careful implementation. Trump previously attempted this during his first administration but was unsuccessful. This time, with Republicans potentially controlling more levers of government, the chances of success appear higher.