Federal Housing Finance Agency Director Bill Pulte said Friday that Fannie Mae and Freddie Mac would stay under federal control for now, reinforcing their conservatorship status while exploring a limited public offering option.
The mortgage entities “will likely stay in conservatorship,” Pulte said at the housing conference ResiDay in New York City. "There will be very little to no interruption. If anything, it may actually make things safer and sounder.”
Fannie and Freddie purchase mortgages from lenders. They either hold these loans in their portfolios or package them into mortgage-backed securities — loans that are pooled together — and sell the bundles to investors. Both firms overloaded on risky mortgage-backed securities during the global financial crisis in 2008 and were placed under federal oversight.
The Trump administration had been "opportunistically evaluating" a public offering for Fannie and Freddie, with a possible timeline as soon as the end of 2025. Pulte emphasized that any offering would be limited, possibly involving up to 5% of the company being public, rather than a full privatization, meaning that both entities would remain under government control. The decision ultimately hinges on President Trump.
“They'll continue to get stronger and I anticipate that the president will make a decision...this quarter or early next year” regarding the initial public offering, Pulte said.
Both entities, Pulte said, collectively oversee about $8 trillion in assets. “They have $160-plus billion dollars in cash on the balance sheet; these businesses are generating $20 to $30 billion in free cash flow a year.”
Trump previously mused about releasing both mortgage agencies from federal control. During his first term, his administration argued that allowing Fannie and Freddie to operate as private companies would boost competition and lead to lower interest rates.
However, that effort stalled as Fannie and Freddie remained undercapitalized, and Congress failed to enact the reforms that Treasury had recommended.
Pulte also said the mortgage entities are considering investing in tech companies through equity stakes.
“We have some of the biggest technology and public companies offering equity to Fannie and Freddie in exchange for Fannie and Freddie partnering with them in our business,” Pulte said.
“We’re looking at taking equity stakes in companies that are willing to give it to us because of how much power Fannie and Freddie have over the whole ecosystem,” he added.
Pulte pushes builders to boost production
Pulte is urging the largest homebuilders to boost production.
“Builders have got to start building. They’re sitting on 2 million entitled lots. They can’t forever blame local municipalities,” he said.
Pulte said Fannie and Freddie are supplying billions of dollars in financing to major builders, ensuring they have capital to continue construction, despite market volatility.
“We’ve given Lennar $8 billion, D.R. Horton $5 billion… We’re providing liquidity to builders to keep the market moving,” he added.
That push for transparency continued in October, when Pulte said Fannie and Freddie would “be asking relevant market participants to disclose big builder loans they are selling to” the mortgage entities in a bid to “continue, and to strengthen, the safety and soundness of the market.”
James Tobin, president and CEO of the National Association of Home Builders, told Homes.com last week that reforms to Freddie and Fannie would help builders finance new homes and boost supply.
He advocates expanding the mortgage entities’ role beyond homebuyer support to include buying and packaging builder loans, which would free up capital, lower borrowing costs and spur construction.
“We believe that Fannie and Freddie could play a role in the supply side equation, not just the demand side,” Tobin said. “If Fannie and Freddie were to be able to create a program where [construction loans] could get rolled off, that would lower those lending rates, and make that market more liquid, which means you could build more housing.”
Pulte denounces Powell
Pulte criticized Fed Chairman Jerome Powell for acting too slowly on lowering interest rates. “He’s not looking into data," Pulte said. "I mean, the data shows very clearly that inflation is way lower.”
"These rates are really, really hurting people,” Pulte added.
The criticism comes as the central bank lowered its benchmark interest rate by a quarter percentage point in October, marking the second cut this year, bringing it to its lowest range in three years. Pulte thinks they should be lower.
Since the Fed’s last policy meeting, the consumer price index rose by less than expected in September. Still, the core measure, which is a more reliable indicator of underlying price pressures, climbed 3% from a year earlier, remaining a full percentage point above the Federal Reserve’s target.
With a government shutdown limiting access to official economic data, policymakers say they lack the information they need to gauge how far they are from their goal of bringing inflation down to 2%, as they weigh their decisions for the rest of the year.
Pulte emphasized the need for a “good Federal Reserve chair” who would prioritize lowering interest rates and improving housing affordability.
That call comes as the Trump administration nears a decision on who will lead the Federal Reserve next year. Treasury Secretary Scott Bessent named five finalists: current Fed board members Christopher Waller and Michelle Bowman, former Fed governor Kevin Warsh, White House National Economic Council Director Kevin Hassett and BlackRock executive Rick Rieder.
Trump could name his pick as soon as December.