Bob Broeksmit spoke out Friday in opposition of a Fannie Mae-Freddie Mac merger, maintaining that keeping the government-sponsored mortgage giants as separate entities is “essential to maintaining a competitive, efficient and resilient housing finance system.”
The president and CEO of the Mortgage Bankers Association (MBA) shared his thoughts in a blog post titled “Why Preserving Competition Between Fannie Mae and Freddie Mac Matters.” He argued that “creating a government-conferred monopoly would diminish innovation, degrade service to market participants, and heighten systemic risk by concentrating housing finance operations within a single entity.”
Fannie and Freddie purchase mortgages that meet their underwriting standards and package them as mortgage-backed securities, providing liquidity and stability to the lending industry.
The concept of a Fannie-Freddie merger made headlines last month when President Donald Trump shared an artificial intelligence-generated image on social media. It showed the president standing above the New York Stock Exchange’s famed bell, flanked by a logo for “The Great American Mortgage Corporation.” That is presumably what the Trump administration would call the combined entity if Fannie and Freddie are taken public with a combined ticker symbol.
The two government-sponsored enterprises (GSEs) have been under federal conservatorship since the 2008 financial crisis. Broeksmit thinks “conservatorship itself has already constrained the GSEs’ ability to compete and innovate.” A merger would compound this problem, he believes, “undermining the very rationale for re-privatization and reducing the incentives necessary for robust competition under a sound regulatory framework.”
The MBA head laid out several “tangible benefits” he believes GSE competition creates, including:
- Diverse technology solutions that enhance seller/servicer interactions
- Risk-sharing transactions, particularly in the multifamily sector, where each GSE has developed distinct securitization approaches
- Specialized market expertise in areas such as condominiums, manufactured housing and renovation products
- Product development that expands access to sustainable mortgage credit
Earlier this month, 46 independent mortgage banks co-signed a letter spearheaded by the Community Home Lenders of America that identified priorities for small and midsized lenders if Fannie Mae and Freddie Mac are taken public. Among those recommendations was that “Fannie and Freddie should not be combined into a market monopoly.”
While it remains uncertain if the Trump administration will follow through on plans to take the GSEs public and/or release the companies from conservatorship, Treasury Secretary Scott Bessent said during an Aug. 27 interview with Fox Business that the administration has discussed offering 3% to 6% of the companies’ stock as a public float.
Broeksmit urged that “preserving meaningful competition between Fannie Mae and Freddie Mac must remain a guiding principle” as the administration weighs potential paths forward. He concluded: “A housing finance system built on innovation, resiliency and consumer benefit depends on it.”
