After a turbulent first year of President Trump's return to the White House, 2026 could bring something singularly disruptive in the housing and mortgage markets: a partial sale of Fannie Mae and Freddie Mac, the government-controlled mortgage giants that underpin roughly 70% of U.S. home loans.
The idea, promoted by Federal Housing Finance Agency (FHFA) Director Bill Pulte and Trump himself, has alarmed critics, who warn that unwinding the 17-year federal conservatorship of the two firms could rattle financial markets and drive up mortgage rates, while potentially generating billions of dollars for key Trump supporters. Pulte has said the administration is "looking to extract … value from [Fannie and Freddie] for the benefit of the U.S. taxpayers."
Economists point out that there also could be significant risks for taxpayers and that the government would be giving up something of value that it currently controls and effectively owns.
What are Fannie Mae and Freddie Mac?
The Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corp. (Freddie Mac) sit at the core of the $13 trillion U.S. housing finance system, guaranteeing mortgages to keep credit flowing and homeownership accessible to more people. Buying a home is the biggest purchase most Americans ever make. And fronting all that money to people is a risky proposition for lenders. So loan guarantees provided by Fannie and Freddie remove some of the risk for mortgage companies, which makes them more willing to make home loans and brings down the cost of borrowing for homebuyers.
Formed more than 50 years ago as government-sponsored enterprises, Fannie and Freddie were owned by private stockholders before the 2008 housing crash, when the government took them over to prevent their collapse. Since then, Congress and previous administrations have deferred efforts to reprivatize them due to disagreement over the best approach and concern that a misstep could hurt the housing market and broader economy.
Now the Trump administration says it may move ahead on at least a partial reprivatization of Fannie and Freddie. Conservatives generally don't like the government having as big a footprint in the mortgage market as it has now with Fannie and Freddie in conservatorship. But Pulte and other administration officials haven't presented a detailed case for why now is the time to start the process. And not everyone thinks it can work, at least given what the administration has said so far.
"I would be surprised if Mr. Pulte can do this," says Simon Johnson, a Nobel Prize-winning economist at the Massachusetts Institute of Technology (MIT). Johnson describes multiple proposals floated by the Trump administration as "complete confusion."
Who is Bill Pulte?
Pulte, 37, has been at the center of controversy since March, when he was appointed by Trump to lead the FHFA, the agency that has overseen Fannie and Freddie since the government assumed control over them. He is the grandson of William J. Pulte, who in 1950 founded Pulte Homes, a large homebuilding firm. Aside from serving on PulteGroup's board, however, the younger Pulte's housing experience is limited, and critics have repeatedly questioned his lack of expertise.
As head of the FHFA, Pulte quickly fired a large share of the companies' boards and installed himself as chairman of both Fannie and Freddie. It's a move that Johnson, who was one of the board members Pulte fired, considers legally dubious. Federal law states that the FHFA director may not hold any office or position at Fannie or Freddie or an affiliated entity, yet Pulte made himself chairman anyway.
"It's very unorthodox," notes Mark Zandi, chief economist at Moody's Analytics, while Johnson argues that it's "striking and extremely weird" that a "fundamental legal underpinning" of the FHFA is being ignored.
The FHFA maintains that Pulte has the legal authority to make himself chairman, and he does have broad powers over the companies while they are in conservatorship. The FHFA declined to comment for this story.
Pulte has joined the president in loudly demanding that the Federal Reserve lower interest rates, a move that economists warn threatens the independence of the central bank. He has also raised eyebrows by bringing to bear the agency's investigative authority to go after Trump's political opponents for alleged mortgage fraud.
Last year, Pulte accused Federal Reserve Gov. Lisa Cook of mortgage fraud — an allegation that she has denied and that her attorney has called "baseless." Cook, a Biden appointee, is the first Black woman to serve on the Fed's Board of Governors. The White House later cited the fraud accusation as grounds for removing her, a step without precedent in the Federal Reserve's more than 100-year history. The case is being considered by the Supreme Court, which has allowed Cook to remain in the job for now.
Pulte has also been at the center of other less consequential controversies. Treasury Secretary Scott Bessent was asked on CNBC to respond to a number of media reports detailing how after Pulte bad-mouthed him to Trump, Bessent threatened to punch Pulte in the face. "Treasury secretaries dating back to Alexander Hamilton have a history of dueling" was Bessent's response.
Talk about selling shares of Fannie and Freddie
Throughout 2025, Pulte has floated the idea of a stock offering to sell off at least a portion of Fannie and Freddie to private investors. Although he has urged caution as to the shape of any offering, he has also repeatedly stressed that any decision about when it might proceed and how it might be structured is the president's alone. In an attempt to nudge down mortgage rates last month, Trump ordered the companies to buy $200 billion in mortgage bonds, increasing uncertainty about the timing of reprivatization. But in a recent interview on CNBC, Pulte declined to rule it out, saying the president would decide in the next month or two whether to move ahead with the plan.
"It's entirely up to the president what he'll decide to do with regard to the IPO of Fannie and Freddie," he said, referring to an initial public offering.
If the administration decides to move ahead, the stakes are high.
"There are severe problems if they don't get it right. And there are potential financial systemic problems," says Susan Wachter, the co-director of the Penn Institute for Urban Research.
What's at stake is a lot of money, according to MIT's Johnson. "If it's done wrong, then you could create risks for the government in the future." He says a misstep could drive up the interest rate that people have to pay on 30-year, fixed-rate mortgages.
While Pulte has said selling shares of Fannie and Freddie would "extract value" for taxpayers, Zandi disagrees.
"From a budgetary perspective, it means nothing," says Zandi. That's because, he says, the government controls and effectively owns these valuable institutions and even has the right to take all their profits — billions of dollars a year. So in a stock offering, he says, taxpayers would be giving up something of value in exchange for an equal amount of cash.
" So at the end of the day, it has no benefit to taxpayers," Zandi says.
Key Trump donors could make billions
Some billionaire Trump donors could get a massive windfall in a reprivatization of Fannie and Freddie. When the companies had to be rescued in the 2008 housing crisis, their stock prices collapsed since the government then essentially owned and controlled them outright. Some investors later bought those shares at fire-sale prices, speculating that an eventual release of Fannie and Freddie from federal control would cause their stakes to be worth a lot more. Those shareholders have largely been at the mercy of what the government decides to do next. An exit from conservatorship could nearly wipe out the value of that old stock or could be structured in a way that significantly rewards those investors.
"The government holds the cards here," says Mike Calhoun, president of the Center for Responsible Lending, a nonpartisan research and policy organization. He says shareholders have filed lawsuits demanding that the government pay the holders of that old stock something. But how much they get — a pittance or a massive profit —that's something the administration could dictate the terms on. "How much hardball do they wanna play?" asks Calhoun.
The billionaire investors with large holdings of that old stock include prominent hedge fund managers who happen to be major Trump donors and vocal supporters: Bill Ackman, through his Pershing Square hedge fund, holds stakes in both Fannie Mae and Freddie Mac that a year ago were estimated to be worth about $1 billion. He has been publicly calling for the government-sponsored enterprises to exit conservatorship. Analysts who track the holdings of prominent investors suggest that John Paulson has made large investments in Fannie and Freddie, but the current size and value of his holdings are not publicly known. A spokesman for Paulson declined to comment.
The potential for an investor windfall has not gone unnoticed by the ranking member of the Senate Banking, Housing, and Urban Affairs Committee, Sen. Elizabeth Warren, D-Mass.
" I am very worried that the Trump administration is very focused on how the billionaires are gonna do in any Fannie/Freddie deal," Warren told NPR, "and not paying any attention at all to what the young family that's hoping to buy their first home is gonna do as a consequence of any deal."
A spokesman for Pershing Square declined to comment, but in a post on X, Ackman said he was aware of suggestions that investors holding Fannie and Freddie stock, "which include many supporters of @realDonaldTrump, are looking for a gift from the President."
"Nothing could be further from the truth," Ackman said.
Why exiting conservatorship is so tricky
"The idea under conservatorship is that you kind of work through the problems, put these institutions back on a sound financial footing, and then at some point, you make them private again — you release them," Zandi says.
In an interview on Fox Business last year, Treasury Secretary Bessent suggested that selling even a small portion of Fannie and Freddie back to private investors might amount to about $30 billion, "one of the biggest deals, maybe the biggest deal in history."
"These are very large companies — valuations in the hundreds of billions of dollars — so if we were to sell a 3% to 6% stake, it would work out to at least that," he said.
But releasing the companies back into private ownership — what some economists refer to as putting them "into the wild" — is easier said than done and involves making some big decisions that for well over a decade Congress and prior administrations have been unable to reach consensus on.
Since Fannie and Freddie are the cornerstone of the multitrillion-dollar U.S. mortgage market, they are the very definition of too big to fail. The federal government already showed that it is willing to step in with hundreds of billions of dollars if necessary to bail out the firms. The stark alternative would be systemic financial and economic calamity.
James Lockhart, a former FHFA director appointed by President George W. Bush, says investors could profit by owning Fannie and Freddie stock from before the 2008 crash, but the government was on the hook for far too much risk. He says it was "heads, the shareholders win; tails, the taxpayers lose."
Lockhart says that equation should be fixed before Fannie and Freddie are released. Given their systemic importance, Fannie and Freddie will always have some sort of implicit backing by the government.
In a May post on Truth Social, Trump wrote: "I am working on TAKING THESE AMAZING COMPANIES PUBLIC, but I want to be clear, the U.S. Government will keep its implicit GUARANTEES, and I will stay strong in my position on overseeing them as President."
But the details of that government backstop and how big a cash cushion the companies would be required to hold in reserve for emergencies to protect taxpayers from another bailout are key issues that have not been decided.
What will the old shares of stock held by investors be worth? Under the terms of the government bailout, Fannie Mae and Freddie Mac still owe hundreds of billions of dollars to the government. Will that debt be forgiven? And if Fannie and Freddie are reprivatized, what authority will the government retain over access to mortgage credit for everyday Americans seeking to buy homes?
Calhoun, of the Center for Responsible Lending, says uncertainty about a public stock offering would likely result in higher mortgage rates because the investors who bankroll those loans would demand higher compensation for the increased risk.
"There's pretty wide agreement [that] there is a risk of disruption in the market from a Fannie and Freddie stock offering or release from conservatorship," Calhoun says.
In an interview in May on CNBC, Pulte seemed to walk back the idea that the administration had a plan to fully reprivatize Fannie Mae and Freddie Mac.
"I didn't say privatize; Trump didn't say privatize," he said. "We're talking about an IPO … but we could do that and keep them in conservatorship."
Calhoun says Pulte appears to be suggesting that the government could sell off just a slice of Fannie and Freddie to investors without rocking the housing-market boat too much, while figuring out the exit from conservatorship later. But until those larger questions are answered, experts say, it will be impossible for investors to know how to value any such stock offering.
"There's really no value there unless the government decides to give up some of the value they have," Lockhart says.
Zandi points to the long list of unanswered questions: Will Fannie and Freddie truly be private? What will their capital standards be? What role will the government continue to play, and how will the companies be regulated? "If you can't answer any of those questions," he says, "how can an investor really, truly value these companies?"
"I'm skeptical," Zandi says. "Investors can't know what the value of these institutions are until they understand what the end state is."
If the Trump administration pushed ahead anyway, that would likely mean investors would offer a lower price for the stock than they would if an exit from conservatorship were more clearly defined, because without that clarity there's greater risk for investors.
"Taxpayers wouldn't get a fair price for the companies' stock," Calhoun says.
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