GSE reform

A group of Democratic senators, including Elizabeth Warren and Chuck Schumer, asked the director of the Federal Housing Finance Agency to pause any efforts to privatize mortgage finance companies Fannie Mae and Freddie Mac.

Signs are emerging that the Trump administration may be less willing to give up control of mortgage giants Fannie Mae and Freddie Mac than investors have bargained for, as policymakers scrounge for ways to close US budget gaps.

Trump has said that the US government would retain guarantees and an oversight role over Fannie and Freddie even as he pursues a public offering for the mortgage giants.

Analysts awaiting specifics on the "implicit guarantee" for Fannie Mae and Freddie Mac are split on whether mortgage rates and guarantee fees could rise.

President Donald Trump said that the US government would retain guarantees and an oversight role over Fannie Mae and Freddie Mac even as he pursues a public offering for the mortgage giants.

By restructuring the GSEs into public utilities, we can end decades of free-riding by private investors on the public credit, writes the chairman of Whalen Global Advisors.

An explicit guarantee for Fannie Mae and Freddie Mac could cause the risk weighting of agency MBS to decline, in turn freeing up banks' balance sheets.

Don Layton, former Freddie Mac CEO, and self-proclaimed "GSEologist" predicts that a release of the two entities will occur within four to six years.

The Trump administration is considering an executive order on housing that may push for the privatization of home loan giants Fannie Mae and Freddie Mac, the Wall Street Journal reported, citing a person familiar with the matter. 

Wall Street is weighing in on the possible fate of home loan giants Fannie Mae and Freddie Mac, after a fleeting suggestion by Treasury Secretary Scott Bessent earlier this week that the government's stakes could eventually become part of the proposed US sovereign wealth fund.

Federal Housing Finance Agency Director Bill Pulte is the new chair for both and he has removed several members while adding a few new names at each.

Three Democratic senators joined Republican colleagues to confirm the businessman, who previously voiced his support for easing government regulations.

Ryan Donovan, the Council of Federal Home Loan Banks' CEO, foresees affordable housing mandates becoming more focused on home supply than demand.

The grandson of the PulteGroup founder did not elaborate on plans for a much-anticipated government-sponsored enterprise exit from conservatorship.

Trump's housing policies risk destabilizing multifamily markets by cutting HUD and GSE support, writes the chairman of Whalen Global Advisors.

If the government were to end the Fannie Mae and Freddie Mac conservatorships, the new status could constrain CRT deal ratings, as they are counterparties.

"Anything that is done around a safe and sound release is going to hinge on the effect of long-term mortgage rates," Bessent said. 

Fannie Mae and Freddie Mac's stock were downgraded to "underperform" by KBW as they are currently priced above its expectations.

If the GSEs are privatized with only their current capital levels, respondents indicated risk premiums on MBS would widen by as much as 45 basis points or more.

Analysts agree recent changes to government agreements will end the Fannie Mae and Freddie Mac conservatorships, but it'll likely happen later rather than sooner.