<p>-
- Trump wants to take Fannie Mae and Freddie Mac public. The plan has some problems.</p>
<p>David HollerithAugust 18, 2025 at 7:00 PM</p>
<p>On Wall Street and in Washington, D.C., confusion reigns over how the Trump administration will pull off a potential public offering for mortgage giants Fannie Mae and Freddie Mac later this year.</p>
<p>The Trump administration has floated the idea of selling down the government stakes in the two giants, a move that would amount to the largest IPO in history under current values being weighed. The precise mechanics of such a deal have yet to be clarified.</p>
<p>Plans being discussed within the administration, first reported by the Wall Street Journal, could involve a 5% to 15% sale of Fannie and Freddie shares at a combined $500 billion valuation or more. But to attract investors, analysts and housing experts see some problems that need to be solved along the way.</p>
<p>In the meantime, President Trump is still weighing all of his options. That means plans could change. He has met in recent weeks with CEOs for some of the biggest Wall Street banks, including JPMorgan Chase's Jamie Dimon, Bank of America's Brian Moynihan, and Citigroup's Jane Fraser, to discuss the mortgage giants.</p>
<p>Earlier this month, Trump added more fuel to the IPO idea, sharing a doctored image of himself ringing the bell at the New York Stock Exchange on Truth Social.</p>
<p>Behind Trump in the image is a banner for neither Fannie or Freddie, but instead a single entity called the "Great American Mortgage Corporation," listed with the stock ticker MAGA.</p>
<p>pic.twitter.com/MZm1gAqGet</p>
<p>— Pulte (@pulte) August 9, 2025</p>
<p>So far, the government's plan for kicking off a public offering for the mortgage giants has left analysts and housing experts alike a bit baffled. Some are questioning whether such a sizable and complex stock offering could get done before the end of 2025.</p>
<p>"To hit this timeline, the Trump administration is going to have to move very quickly through some very weedy and substantive policy discussions," said Jeb Mason, a former Bush White House and Treasury official.</p>
<p>Fannie Mae and Freddie Mac, also known as the Federal National Mortgage Association (FNMA) and Federal Home Loan Corporation (FMCC), play essential roles in the US housing market by purchasing mortgages and then packaging and selling them as bonds to investors.</p>
<p>Both fell under government conservatorship during the 2008 financial crisis, when mortgage defaults soared. Untangling the two firms from the government's control has been a long and hotly debated matter.</p>
<p>Such policy discussions, Mason said, revolve around weighing the potential benefits of reducing the federal government's role in the giants against the risks of disrupting the housing market and "fueling bubbles that could blow up the economy again."</p>
<p>"It's also possible that they are going to try to have some sort of market offering without answering all the key questions," Mason added.</p>
<p>Fannie and Freddie advisor: CEO of JPMorgan Chase, Jamie Dimon in New York City. (Photo by Noam Galai/Getty Images) (Noam Galai via Getty Images)</p>
<p>Some prominent Wall Street investors, including billionaires Bill Ackman and John Paulson, placed their bets years ago by purchasing common and preferred stock in Fannie and Freddie, expecting the conservatorship for the two companies would eventually end.</p>
<p>The first Trump administration aimed to do it, even hiring Morgan Stanley and JPMorgan Chase for advice. Ultimately, it could not get the job done.</p>
<p>The most crucial questions for potential IPO investors orbit around whether the mortgage giants can promise some degree of shareholder rights along with a relatively stable level of profit. And that's far trickier for these companies to deliver under government control.</p>
<p>The administration has at least two essential problems in front of it to fulfill those assurances, according to KBW analyst Bose George.</p>
<p>In exchange for bailing out the mortgage giants more than a decade ago, the Treasury Department holds a substantial stake in Fannie and Freddie senior preferred shares, currently valued at over $340 billion.</p>
<p>The conventional thinking is that the federal agency must either dissolve or convert its shares to common stock, with both options presenting potential lawsuits from taxpayers or existing shareholders.</p>
<p>"It could be a very messy start for an IPO, especially with this idea that there could be huge amounts of litigation," said George.</p>
<p>The other problem is that the mortgage giants face a $181 billion gap in the amount of loss-absorbing capital they are required to set aside in the event of a downturn. Meeting that minimum requirement is not only seen as taking the better part of a decade, it would also drag down each of the giants' return on equity so much that "no one will buy the stock," said George.</p>
<p>But for the housing market perhaps the greatest worry is if the Trump administration caters too much to investors.</p>
<p>For sale? the Fannie Mae headquarters in Washington. (AP Photo/Manuel Balce Ceneta, File) ()</p>
<p>There's "all kinds of risk to the housing system and homeownership generally, if you wind up with an administration that is too hell-bent on making Fannie and Freddie too appealing to investors," said Jim Parrott, a former Obama administration housing adviser.</p>
<p>The Trump administration has, so far, stirred clear of signaling a desire to shift the mass perception that the government will backstop these firms in a crisis.</p>
<p>"I want to be clear, the U.S. Government will keep its implicit GUARANTEES," Trump said in late May.</p>
<p>This guarantee allows Fannie and Freddie to buy mortgages, package them as bonds, and sell them to investors at a lower credit rating. It remains hotly debated whether the administration will need to take further steps to ensure this guarantee does not weaken.</p>
<p>"It's likely that the companies will stay in conservatorship, but the president is actively looking at simultaneously potentially taking them public," Bill Pulte director of the Federal Housing Finance Agency (FHFA) director, which oversees the mortgage giants, told Baron's last month.</p>
<p>"There are two pieces... how can we maximize the value for the US taxpayer with Fannie and Freddie. On the other side, how can we keep mortgages rates... flat or even bring them down," Treasury Secretary Scott Bessent said last Thursday during an interview on the "Mornings with Maria" program on the Fox Business Network.</p>
<p>Treasury and FHFA didn't respond to requests for comment.</p>
<p>If there is any degree of change of status between Fannie, Freddie, and the government where certain issues aren't addressed, "many Americans could unwittingly face higher mortgage rates," PIMCO's head of public policy Libby Cantrill said in a note to clients last week.</p>
<p>"There is a vast communications task that has to occur to the housing complex, the realtors, the home builders, the lenders, the banks, everybody," said Christopher Whalen, chairman of advisory firm Whalen Global Advisors.</p>
<p>David Hollerith is a senior reporter for Yahoo Finance covering banking, crypto, and other areas in finance.</p>
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