Last week, during an appearance on CNBC, Bill Pulte said a decision on whether to sell shares in government-sponsored mortgage investors Fannie Mae and Freddie Mac through an initial public offering would likely be made “in the next month or two.”
Pulte, who serves as both board chairman at Fannie and Freddie and director of their regulating body, the Federal Housing Finance Agency (FHFA), added that the final determination regarding an IPO lies “entirely” with President Donald Trump.
Later that day, Trump made a major announcement on social media: He had instructed his “representatives” to buy $200 billion in mortgage-backed securities (MBS), a move designed to lower mortgage rates and improve housing affordability. A few hours later, Pulte confirmed in an X post that Fannie and Freddie would be making the purchases.
The massive scale of the proposed MBS buys has raised fresh questions about the viability of a public stock sale of the companies, which collectively back the lion’s share of the U.S. mortgage market.
Marty Green, a principal with Polunsky Beitel Green LLP, a firm that provides legal support to residential mortgage lenders, thinks the MBS announcement “almost certainly” delays the IPO plans “for the foreseeable future.”
He cites two main reasons, the first being that “taking $200 billion off their balance sheet that’s in cash today and moving it to MBS will take a large amount of liquidity away, so when you think about how they were being positioned for a potential [IPO], it’s hard to imagine how potential investors would view that.”
The second, perhaps more important reason, in Green’s view, is that Trump’s directive serves as an “indication that the administration now sees Fannie and Freddie as a real mechanism to impact housing policy and affordability policy.”
“Going into an election year, they’re wanting to have all the levers they can to impact things, perhaps improve things for Americans in the meantime,” Green told Scotsman Guide, “and so keeping them in conservatorship probably is more consistent with that goal.”
IPO backstory
Fannie and Freddie were placed in federal conservatorship under the oversight of the FHFA in 2008, following a bailout by the Treasury Department, to prevent the collapse of the housing finance system during the subprime mortgage crisis. The companies were subsequently delisted from the New York Stock Exchange and now trade on the over-the-counter Pink Sheets.
When the potential Fannie-Freddie IPO was first teased by Trump in May 2025, it was unclear whether that meant a release from conservatorship. The ensuing months have done little to alleviate that mystery, though Treasury Secretary Scott Bessent indicated in August that 3% to 6% of Fannie and Freddie stock may be a reasonable public float should Trump green-light the offering.
It was during that mid-summer period that a parade of Wall Street CEOs were summoned to the White House to make their pitches for the coveted role of lead bank in the monetization plans.
But The New York Times reported Thursday that despite the appointment of a law firm, Sullivan & Cromwell, to advise on the potential public offering, no banks have officially been appointed to sell the plan to institutional investors.
IPO aside, Green thinks the MBS announcement decreases the near-term likelihood of the companies being released from federal conservatorship.
“If you’re talking about the spinoff of Fannie and Freddie, I think it’s more likely than not they don’t happen in 2026 now,” Green said.
The affordability push
Just the news of Trump’s MBS directive had the intended effect of pushing down mortgage rates.
Though the 30-year fixed-rate mortgage has since crept back above 6%, it dipped more than 20 basis points to 5.99% on Jan. 9, in the immediate aftermath of the announcement, according to the Mortgage News Daily Rate Index.
The long-term impacts of the mortgage bond purchases are less certain.
Bessent told Reuters last week that the goal of the MBS buys is to match the Federal Reserve’s roughly $15 billion monthly run-off from its balance sheet, which he hopes will reduce yield spreads between the Fannie- and Freddie-issued mortgage-backed securities and U.S. Treasury bonds, thus indirectly lowering mortgage rates.
UBS analysts have indicated they believe the $200 billion of MBS purchases could drive rates down by 10 to 25 basis points, which would land the 30-year rate below the psychologically important 6% level for prospective homebuyers.
But Richmond Fed President Thomas Barkin argues that while Fannie and Freddie buying that quantity of mortgage bonds “should have an impact on the mortgage resale market, which perhaps will have an impact on mortgage rates,” he believes “the answer is on the supply side.”
“I’m an advocate for the kind of initiatives that would get more houses into the market and onto the market,” Barkin told reporters last week, according to Reuters.
Green thinks the MBS initiative will be part of a broader housing affordability push by the Trump administration, such as allowing tax deductions for homeowners insurance and lowering guarantee fees and loan-level price adjustments charged by Fannie and Freddie on purchase loans.
“There’s still a lot of levers that they have at Fannie and Freddie that they haven’t yet really capitalized on,” he said.
