The Federal Housing Finance Agency is seeking public input on a new strategic plan that could reshape the future of Fannie Mae and Freddie Mac.
The plan, released on Wednesday, outlined the agency’s priorities for the next five years, aiming to ensure that Fannie Mae, Freddie Mac and the Federal Home Loan Banks operate safely and soundly to support the national housing finance market.
One objective in the plan hints at the shift toward deregulation. The FHFA says it will comply with executive orders aimed at promoting prosperity through deregulation and will identify and fix regulations that are "overburdensome, costly and inconsistent with efficient operations of the enterprises."
The request for comment comes as the Trump administration has touted its aspirations to exit the long-running conservatorship of Fannie Mae and Freddie Mac. It is unclear how the agency might push those changes.
“It’s not surprising to see that as an objective, but I didn’t read it as signaling a major shift,” Dennis Shea, the executive vice president at Bipartisan Policy Center, told Homes.com.
Fannie Mae and Freddie Mac are government-controlled entities that set guidelines for the conventional loans they buy and package into securities that can be sold to investors. Both have been under federal control since the 2008 financial crisis after the agencies took on toxic loans during the housing boom of the early 2000s.
According to the Wall Street Journal, executives of the country's largest banks reportedly visited the White House to discuss the complicated nature of taking the government-backed entities public.
Shea emphasized that the FHFA is required by statute to issue a strategic plan every few years, framing the latest release as part of a routine process.
Notably, regulatory language was absent from the prior strategic report under the Biden administration, which aligned with that administration’s stance of maintaining federal control.
FHFA’s move comes as policymakers and housing experts debate whether the agencies should remain under federal control or return to private hands. Many experts agree that any transition would be complex and drawn out, with significant implications for borrowers, lenders and the broader economy. Unwinding federal control would require weighing tradeoffs between market stability and taxpayer risk.
“Any direction should be considered carefully,” said Ben Sampson, a Ph.D. student at Stanford University’s Department of Economics who co-authored a recent report on the potential future of an independent Fannie and Freddie. “The Federal Housing Finance Agency has been talking to a lot of stakeholders. Hopefully, that creates an informed decision for the path for Fannie and Freddie.”
At the heart of the debate is how changes could affect mortgage rates, access to credit and the stability of the housing market.
“Fannie and Freddie are integral to the mortgage market," Sampson said. "They are keystone to what is going on in the mortgage market."
The administration has said little about its plans. Sen. Elizabeth Warren (D-Mass.) sent a letter to Treasury Secretary Scott Bessent in September, seeking information about their plans to end conservatorship.
“The American public deserves full transparency into this effort,” Warren wrote.
This isn’t the first time Trump has tried to end conservatorship. During the president’s first term, the effort ultimately stalled, as Fannie and Freddie remained undercapitalized and Congress failed to enact the sweeping reforms Treasury recommended.
“Ending the conservatorships is dependent on the enterprises meeting key milestones, chief among which is retaining or raising sufficient capital or other loss-absorbing capacity,” the FHFA wrote in a 2019 report to Congress. Without those changes, the companies remained under federal control, and the debate over their future continues today.
The White House, FHFA, Treasury Department, Fannie Mae and Freddie Mac did not respond to requests for comment.
Some experts warn loosening oversight could risk repeating past mistakes.
“If we got back to how it was before, do we run the risk of the same situation because banks are greedy ... Without the restrictions and regulations, capitalism runs wild,” Jack McCabe, owner of McCabe Research and Consulting, told Homes.com.
The FHFA’s plan makes clear that, for now, Fannie Mae and Freddie Mac will remain under conservatorship, with the agency actively managing their boards, setting annual priorities and safeguarding assets to protect taxpayers.
The public has the opportunity to submit comments to FHFA regarding its plan by early November.
Impacts to homeownership
Changes to Fannie and Freddie's status could be felt by homebuyers, some have warned.
A new study from Stanford’s Institute for Economic Policy Research warns that certain reforms to privatizing the two mortgage giants could increase mortgage costs because Fannie Mae and Freddie Mac may need to raise fees to meet new capital requirements, compensate for reduced government support and pay new commitment fees.
These costs are passed on to borrowers, resulting in higher rates and monthly mortgage payments. Researchers estimate mortgage rates could increase by 0.2 to 0.8 percentage points, equaling $500 to $2,000 more per year on a typical mortgage payment.
“If a borrower takes out a mortgage of 30 years, then that interest rate change could last for the rest of that mortgage term,” Sampson said. “Consumers depend on the mortgage markets for lower interest rates … To the extent it creates a new norm, it could be a long-lasting effect.”
“The goal with this [study] was to highlight potential path and risk, because there’s so much uncertainty with what path the government will pursue, we’re uncertain what those risks would be,” Sampson added.