In order to protect their interests and those of their customers, 46 independent mortgage banks (IMBs)—non-bank mortgage loan originators—have sent a joint letter to Scott Bessent, Treasury Secretary, and Bill Pulte, Director of the Federal Housing Finance Agency (FHFA), identifying IMB priorities for Fannie Mae and Freddie Mac’s exit from conservatorship.
The letter, spearheaded by the Community Home Lenders of America (CHLA), lands in the wake of reports that the Trump administration is taking initial steps towards an initial public offering (IPO) of stock in Fannie and Freddie before year-end.
Fannie and Freddie, the government-sponsored enterprises (GSEs), help provide stability and affordability to America’s home mortgage market. The National Association of Realtors (NAR) reports that the two support approximately 70% of the U.S. mortgage market.
The letter from the IMBs outlines five policy recommendations for a conservatorship exit to protect small lenders, maximize competition and consumer choice, and boost homeownership by:
- Mandating G-Fee parity and a competitive cash window
- Eliminating Wall Street bank charters for GSE loans
- Keeping Fannie Mae and Freddie Mac separate under a utility model
- Having the GSEs maintain critical mortgage loan products
- Having the GSEs purchase mortgage-backed securities (MBS) to lower mortgage rates
On September 6, 2008, with consent of both Fannie Mae’s and Freddie Mac’s Boards of Directors, the Director of the FHFA exercised statutory authority to place each GSE into conservatorship. This move established the two conservatorships in response to a deterioration in the housing markets that damaged the financial condition of each, and left both of them unable to fulfill their missions without government intervention.
The IMB sign on letter cites the critical importance of IMBs in providing mortgage loans for first-time homebuyers—noting that IMBs now originate 83% of all mortgage loans and 75% of all Fannie Mae/Freddie Mac loans.
A topic of Trump’s agenda since taking office, the President addressed the topic on social media outlet Truth Social in late May, making his intentions known on the long-discussed privatization of the GSEs.
“I am giving very serious consideration to bringing Fannie Mae and Freddie Mac public,” said President Trump via Truth Social. “I will be speaking with Treasury Secretary Scott Bessent, Secretary of Commerce Howard Lutnick, and the Director of the Federal Housing Finance Agency, among others, and will be making a decision in the near future. Fannie Mae and Freddie Mac are doing very well, throwing off a lot of CASH, and the time would seem to be right. Stay Tuned!!”
Barron’s reported that Fannie Mae and Freddie Mac stocks traded more than 30% higher after President Trump’s post on the GSEs’ going public.
President Trump has engaged with some of the nation’s top banking minds to explore bringing the GSEs public. President Trump reportedly met with Bank of America CEO Brian Moynihan, J.P. Morgan CEO Jamie Dimon, and Goldman Sachs CEO David Solomon on the matter, to discuss ideas and strategies on launching large-scale IPOs for Fannie Mae and Freddie Mac, and how some of the nation’s major banks like Chase and Bank of America could participate in the process.
In further anticipation of the sale of Fannie and Freddie, Reps. Tom Suozzi and Nicole Malliotakis introduced a bipartisan bill calling for the government to dedicate as much as $250 billion received from ending the conservatorship of the GSEs to be invested in the construction of up to 3.5 million affordable housing units.
Under the Housing for U.S. Act, union labor would be contracted to build up to 3.5 million housing units, dedicated specifically for middle-class Americans. After 10 years, the remaining funds would be used for deficit reduction. The Suozzi/Malliotakis measure calls for the creation of a federally backed, low-cost loan program that will:
- Build new housing units across the country.
- Serve working families earning up to 150% of Area Median Income (AMI)—more than $210,000 per year for a family of four in high-cost areas like New York City.
- Prioritize ownership and affordability for teachers, nurses, first responders, tradespeople, and other Americans who power U.S. communities.
“If Fannie and Freddie are released, the government could recoup $250 billion,” said Rep. Suozzi. “We should capitalize on this moment by using these funds to build homes for men, women, and families in the American middle-class, and we should pay union workers to do it. It’s good for the economy, good for families, and good for America.”
Just last week, FHFA Director Pulte appeared on “Mornings With Maria” on Fox Business, discussing the government’s intent to sell around 5% of Fannie Mae and Freddie Mac in an IPO.
“It’s great that we finally have a President that number one knows that they [Fannie Mae and Freddie Mac] exist, and number two is looking to extract appropriately and legally value from them for the benefit of the U.S. taxpayers,” said Pulte in an interview with Fox host Maria Bartiromo. “That is a huge departure from where we were.”
Pulte valued the two GSEs at “$500-$700 billion,” and believes that number can and will climb.
“If you recall, some people tried to get the President, and he very wisely decided not to sell the companies years ago. He doesn’t get much credit for it, but should get a lot of credit for it,” added Pulte. “At the time, they wanted to sell these companies for $50-$100 billion, and today, those companies, in my view, are worth potentially $500-$700 billion to the United States government. I think that number is going to be in the trillions one day.”
Click here to read the full letter from the IMBs to Treasury Secretary Bessent and FHFA Director Pulte.
The post Independent Mortgage Banks Express Concern Over Fannie/Freddie IPO first appeared on The MortgagePoint.
