Elizabeth Warren (D-Mass.), ranking member of the Senate Banking, Housing and Urban Affairs Committee, and Minority Leader Chuck Schumer (D-N.Y.), along with more than a dozen Democratic senators recently sent a letter for Federal Housing Finance Agency Director Bill Pulte raising concerns about reprivatizing Fannie Mae and Freddie Mac.
“Given the seismic change this decision represents and the concerns it raises about the stability of our nation’s housing and financial markets, we write to ask that [FHFA] pause efforts to reprivatize or otherwise alter the enterprises, including relisting their common and preferred stock,” the senators wrote, adding that economists have warned that reprivatization could have “disastrous effects on the mortgage market, driving up costs for homebuyers even further.”
The lawmakers cited experts that claim the move could increase by up to 1% in the first year of privatization.
The lawmakers asked Pulte for details on the administration’s plans, specifically around relisting the enterprises on a stock exchange. The senators said the administration has not yet released any information about whether the government-sponsored enterprises’ financial positions would make it feasible to take them public.
The group requested answers to their questions by June 18, followed by a briefing to discuss the responses.
As of December 2024, Fannie Mae and Freddie Mac collectively guarantee $6.6 trillion in agency mortgage-backed securities, or 50% of all outstanding U.S. mortgage debt, according to figures cited by J.P. Morgan. Ginnie Mae mortgages make up another $2.5 billion or 20%.
In response to the global financial crisis, the Treasury placed Fannie Mae and Freddie Mac into conservatorship in September 2008 with the goal of stabilizing the mortgage market and restoring confidence in the GSEs. During his Senate confirmation hearing in February, Pulte said the conservatorships of Fannie Mae and Freddie Mac should not be indefinite, but “any exit from conservatorship must be carefully planned to ensure the safety and soundness of the housing market without upward pressures on mortgage rates.”
