Detroit, Michigan – Bill Pulte, the confirmed Federal Housing Finance Agency head for the Trump administration, expressed his cautious approach towards the possible privatization of Fannie Mae and Freddie Mac. Pulte emphasized the need to prioritize safety and soundness in any discussions about transitioning these mortgage giants out of government conservatorship.
During Trump’s first administration, attempts to remove Fannie and Freddie from conservatorship were unsuccessful. The Republican Party, including many of Trump’s allies, has long pushed for ending this temporary arrangement. The current state of the housing market includes high borrowing rates, limited supply, and soaring home prices, prompting concerns about the impact of privatization on mortgage markets.
While mortgage rates have slightly decreased, they remain higher than in recent years. The average 30-year fixed mortgage rate, according to Freddie Mac, was 6.65% as of the most recent reporting period. Pulte, whose family has deep roots in the homebuilding industry, emphasized the need for thorough analysis before any steps towards privatization are taken, particularly regarding the potential effects on mortgage rates.
Fannie and Freddie were placed under government control in the aftermath of the 2008 housing crisis to stabilize the market. Their role in purchasing mortgages from lenders and repackaging them for investors has been instrumental in ensuring a consistent flow of money for affordable home loans. Efforts to privatize these entities must consider the risks associated with spooking investors and the potential impact on mortgage lending rates.
Experts caution that without a government safety net similar to that provided during the 2008 crisis, privatization could lead to higher borrowing costs. The government’s stake in Fannie and Freddie, valued at $147 billion in 2024, has proven profitable. Pulte views these entities as valuable assets for the American taxpayer, emphasizing the need to prioritize efficiency and transparency while tackling any issues of fraud within Fannie Mae and Freddie Mac.
As the newly confirmed FHFA director, Pulte aims to enhance the safety and soundness of these organizations while ensuring they continue to operate efficiently. With a focus on combating fraud and maximizing the potential benefits for taxpayers, Pulte’s appointment signals a period of cautious evaluation and strategic planning within the realm of housing finance.