Less than a week after FHFA announced the doubling of its annual investment cap, President Trump took to social media to suggest the creation of The Great American Mortgage Corporation, with a target public offering date of November 2025.
- According to the New York Times, this new corporation would fast-track plans for a public offering of Fannie Mae and Freddie Mac by year-end, potentially valuing them at $500 billion.
- Fannie Mae and Freddie Mac make up nearly half of the $13 trillion residential mortgage market.
- President Trump met with major bank executives (JPMorgan, Goldman Sachs, Bank of America, and Citigroup) to figure out how to structure such a deal, which could repay part of the $187 billion spent during the 2008 bailout and bring in private capital.
- According to Axios, a senior administration official confirmed that the government is planning to start a process of selling down its stakes later this year and weighing all options for how to handle the sale, including somehow combining and selling the two as one entity.
What to watch: The government would have to take more concrete action relatively soon if it intends on offering the new entity as soon as November.
Yes, but: Uncertainties remain about an explicit government backstop, ongoing government control, investor demand, and market impacts, including whether the conservatorship ends through executive or congressional action.
