Democratic senators are concerned about President Donald Trump’s hints that he may seek to remove mortgage giants Fannie Mae and Freddie Mac from federal conservatorship and relist the companies via a public stock offering.
The senators, led by Elizabeth Warren, D-Mass., made those concerns clear in a letter sent Thursday to Bill Pulte, director of the Federal Housing Finance Agency (FHFA), which has regulated the government-sponsored enterprises through a conservatorship arrangement since 2008. The group of 14 senators, which also included Bernie Sanders, an independent from Vermont, said they are worried about the impacts a conservatorship exit would have on mortgage costs.
“Hasty and poorly planned changes to the Enterprises could dramatically increase costs for families seeking to purchase a home, rewarding President Trump’s billionaire campaign contributors while making the housing crisis even worse,” the letter read. It asked Pulte to “pause efforts to reprivatize or otherwise alter the Enterprises” until Congress has been fully briefed on the plans.
Warren and her Senate colleagues cited a U.S. News & World Report article from May that quoted an economist and several mortgage professionals about the potential impacts of removing Fannie and Freddie from FHFA oversight.
“Economists have warned that reprivatizing the Enterprises could have disastrous effects on the mortgage market, driving up costs for homebuyers even further,” the senators wrote. “For example, some experts have estimated that mortgage rates could increase by up to 1% in the first year of privatization alone.”
Fannie and Freddie play a vital role in the mortgage market by purchasing mortgages from lenders and packaging them as mortgage-backed securities on the secondary market. The process provides cash to lenders, allowing them to originate more loans, and has the effect of making the secondary mortgage market more liquid, which helps lower the interest rates paid by borrowers.
On May 21, Trump wrote on his social media platform Truth Social that he was “giving very serious consideration to bringing Fannie Mae and Freddie Mac public,” adding that the companies were “doing very well, throwing off a lot of CASH, and the time would seem to be right.”
A week later, Trump clarified that he would keep the U.S. government’s “implicit guarantees” of Fannie and Freddie, meaning that the federal government would bail them out if they become insolvent and are unable to meet their financial obligations.
Pulte has repeatedly deferred to Trump on the subject of Fannie and Freddie’s potential conservatorship exit, saying that the decision is Trump’s to make. During a May 28 event at Fannie Mae headquarters, Pulte stated that “the president is essentially, in my view, in many ways the conservator of Fannie and Freddie,” not the FHFA.
The letter from the senators expressed concerns over this deference to Trump.
“Despite your statutory role as regulator and conservator of the Enterprises, you recently stated that President Trump will ‘eventually make whatever decision that he wants to make, on his own timeline,’” the senators wrote. “It is incredibly concerning that you appear to be conceding your responsibility to ensure the safety and soundness of the Enterprises to advance the President’s political agenda.”
The letter concluded by requesting that Pulte respond to eight questions about the potential impacts that taking Fannie and Freddie public may have on the housing market and mortgages.
The first question asks: “You recently said that privatization of the Enterprises was not a top priority for the Trump Administration. What changed, and what factors influenced the President’s recent social media posts regarding taking the Enterprises ‘public’ and releasing them from conservatorship?”
The senators also requested copies of any FHFA analyses and communications regarding what effects the removal of Fannie and Freddie from FHFA control would have on mortgage rates, multifamily housing production, housing costs, investor confidence and market liquidity. “If no analyses exist, please explain why not,” they wrote.
Pulte, who typically posts on the social media platform X at least once a day, has not commented publicly since the letter was released.
