A total of 46 independent mortgage banks (IMBs) have co-signed a letter spearheaded by the Community Home Lenders of America (CHLA) that identifies priorities for small and midsized lenders if government-sponsored enterprises (GSEs) Fannie Mae and Freddie Mac are taken public by the Trump administration.
The CHLA letter, which is addressed to Treasury Secretary Scott Bessent and Federal Housing Finance Agency (FHFA) Director Bill Pulte, lays out policy recommendations designed to “protect small mortgage lenders, maximize competition and consumer choice, and boost homeownership in a safe and sound manner.”
Among the recommendations is that “Fannie and Freddie should not be combined into a market monopoly.”
The administration has not confirmed whether an initial public offering of Fannie and Freddie shares would be executed as one stock listing or two separate companies. But President Donald Trump fueled speculation that an IPO would involve a single ticker symbol in a social media post featuring imagery of a makeshift “Great American Mortgage Corporation” logo.
Fannie and Freddie purchase mortgages from lenders, providing liquidity and stability to the mortgage market. The companies have been in federal conservatorship under FHFA oversight since the 2008 financial crisis and were delisted from the New York Stock Exchange in 2010.
The CHLA and the letter’s IMB co-signers believe Fannie and Freddie should “operate under a Utility Model with authority to cap excessive G Fees or bar unduly risky loans.”
G fees refers to guarantee fees, which Fannie and Freddie charge to cover projected credit losses from potential borrower defaults. The IMBs urge Fannie and Freddie to maintain what’s known as “G-fee parity,” which is the narrowing of preferential pricing based on lender size for guarantee fees.
They also would like to see the preservation of the competitive cash window, which is the period when loans can be sold to the GSEs for cash instead of mortgage-backed security swaps.
Additionally, the IMBs believe the administration should not allow any additional GSE charters for large Wall Street banks.
Big banks have frequently been discussed in the same breath as Fannie and Freddie of late. In early August, Bloomberg reported that Trump met with several big-bank CEOs about the IPO plans. The following week, The Wall Street Journal reported the administration was considering offering between 5% and 15% of Fannie and Freddie’s stock in a IPO that could raise around $30 billion.
Since then, details about the potential IPO have been trickling out from Trump administration officials, though it is still unclear whether the companies would remain under federal conservatorship if a portion of their shares are offered to the public.
In an interview with Fox Business last week, Bessent said 3% to 6% of Fannie and Freddie stock is a more likely public float amount based on his conversations with Wall Street bankers. He added that the administration is “committed to making sure that there is no change in the spread of mortgage [rates] over Treasurys” from the IPO process.
Pulte reiterated Bessent’s comments Tuesday, telling Fox’s Maria Bartiromo that “I think we’re looking at about 5%, and I think it will be very oversubscribed.”
