Fannie Mae, Freddie Mac IPO Plans Face Democratic Pushback On Mortgage Rate Risks: Report

2025-08-29 10:08:16

(MENAFN- AsiaNet News)

Democrats have reportedly called on the Trump administration to hold off on its plans to sell the government's shares in Fannie Mae (FNMA) and Freddie Mac (FMCC) until a study is conducted on how this move may impact mortgage rates.

According to a report by Bloomberg, Senators Elizabeth Warren, Cory Booker, and Chuck Schumer sent a letter to Federal Housing Finance Agency Director William Pulte, asking him to focus on housing affordability. In the letter, they reportedly criticized him for prioritising the Federal Reserve's building renovations and the mortgage fraud allegations against Federal Reserve Governor Lisa Cook.

Fannie Mae's stock was up 1.8% in pre-market trade, but Freddie Mac's stock dipped more than 1%. On Stocktwits, retail sentiment around Fannie Mae trended lower within 'bearish' territory, while retail sentiment around Freddie Mac dipped to 'extremely bearish' from 'bearish' territory over the past day.

It was reported earlier this month that the Trump administration was looking to sell its shares in both companies to raise up to $30 billion. Sources said that officials were considering a combined valuation of over $500 billion, and could sell between 5% to 15% of the companies' stock. At the time, it remained undecided whether the two mortgage giants would pursue individual listings or a joint IPO.

The pushback from Senators Warren, Booker, and Schumer comes against a backdrop of mortgage rates holding above 6.5% and housing activity stuck at the weakest level in decades.

Market analysts share those concerns. Some warn that privatizing Fannie and Freddie could lift mortgage rates if investors no longer assume an implicit government backstop in the event of losses. The two companies, both of which bundle and sell mortgages, were brought under government control after the 2008 financial crisis.

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