The mortgage world just got a serious jolt. In his first full week as head of the Federal Housing Finance Agency, William Pulte made a bold entrance—removing more than a dozen board members at Fannie Mae (FNMA, Financial) and Freddie Mac (FMCC, Financial) and stepping in as chairman himself. The shake-up didn't stop there: key executives, including Freddie Mac's CEO, were ousted, and dozens of staff were placed on administrative leave. Behind this sweeping move lies a much bigger play—Trump officials are exploring how to privatize the mortgage giants, a multi-hundred-billion-dollar shift that could reshape America's housing finance system. Treasury Secretary Scott Bessent hinted that stakes in Fannie and Freddie might feed into the sovereign wealth fund President Trump has proposed, though details are still murky.
The numbers are eye-popping. A recent plan valued Fannie and Freddie above $330 billion, with the government's portion topping $250 billion. If the entities raise an additional $20–30 billion from outside investors—akin to a blockbuster IPO—it would rank among the largest equity offerings in history. That prospect has already caught Wall Street's attention. However, there are concerns. A poorly managed handover could rattle mortgage-backed securities markets and push mortgage rates higher, especially if investors lose faith in pricing or risk models. Industry insiders have flagged worries that even small technical glitches could lead to outsized consequences in today's fragile housing environment.
Still, the administration seems undeterred. A potential executive order on housing is reportedly in the works, signaling intent to move forward. The White House says the effort fits squarely into Trump's America First agenda of deregulation and deficit reduction. While Moody's chief economist Mark Zandi doesn't see an immediate threat, he warned that an economic slowdown could expose cracks in the new leadership. For now, investors are watching closely.
