Mortgage Giants Fannie, Freddie Soar on Report That Trump Is Looking at Share Sale

Shares of mortgage giants Fannie Mae (FNMA) and Freddie Mac (FMCC) soared on Friday after a report suggested that President Donald Trump could push for the federal government to sell stock in the companies.

The Wall Street Journal reported that the Trump administration was developing a plan to launch an initial public offering for the government-sponsored mortgage companies. The deal could see Fannie and Freddie valued at $500 billion, with the government making as much as $30 billion by selling a limited number of shares in the companies. The report said Trump has discussed the idea with the leaders of several major banks.

The government owns most of the shares of the mortgage giants, but some shares are for sale on the over-the-counter market. Shareholders could stand to gain on the deal, but a lot depends on how the government values the different kinds of shares. The report said many details still need to be resolved, raising questions over whether it could happen this year. Shares of each are up around 20% in intraday trading. 

The government took control of Fannie and Freddie after the 2008 financial crisis and has been under a “conservatorship” since then. Before that, the companies were for-profit enterprises listed on the New York Stock Exchange. They had been founded as government-regulated agencies. 

Fannie and Freddie are important because they help pump cash into the mortgage market. The companies buy mortgages from banks and other lenders and repackage them as low-risk investments with government backing. This allows banks to have more money freed up to lend to borrowers.

Trump raised the topic of selling shares in Fannie and Freddie earlier this year, arguing in a Truth Social post that he intended to keep the government guarantee on the investments. Congressional Democrats have argued that taking the companies public could risk raising mortgage rates.