When Sarah and Miguel first started searching for a home in Austin, Texas, they thought the hardest part would be choosing between a fixer-upper with “character” and a sleek, new build with solar panels. What they didn’t expect was to find themselves up at night, obsessing over something neither of them had ever thought much about before: the fate of Fannie Mae and Freddie Mac.
Yes—those two entities that sound more like distant relatives than financial institutions.
But in today’s America, where homeownership feels increasingly like an impossible dream for millennials and Gen Z, what happens behind the scenes in Washington D.C. and Wall Street can determine whether a young family gets the keys to a home—or just another lease renewal.
So when Donald Trump took to Truth Social and casually announced he was “seriously considering” privatizing Fannie Mae and Freddie Mac, it wasn’t just another policy tidbit buried beneath campaign slogans. It hit real people in real ways.
“I’m looking seriously at taking Fannie and Freddie public,” Trump posted. “They’re doing great right now, releasing loads of cash, and the timing seems right. Stay tuned!”
On the surface, it sounded like a businessman recognizing a golden moment. But what does that mean for someone like Sarah or Miguel, or millions of other Americans trying to climb the increasingly rickety ladder of homeownership?
To understand that, you have to go back—way back—to 2008. Fannie Mae and Freddie Mac, two government-sponsored enterprises (GSEs), were created to bring stability and liquidity to the secondary mortgage market. Their role? To buy mortgages from lenders, pool them, and sell them as securities to investors. This allows lenders to keep issuing more loans, which in theory makes it easier for people to buy homes.
But during the financial crisis, they teetered on the edge of collapse. The government stepped in with taxpayer money to keep them afloat, in exchange for hefty preferred shares. It wasn’t exactly a bailout everyone agreed with—but it kept the housing market from completely imploding. Since then, these two behemoths have been under government conservatorship, watched over by the Federal Housing Finance Agency (FHFA) like two reckless teens on financial probation.
Yet, in the years that followed, Fannie and Freddie didn’t just survive—they turned massive profits. Over $300 billion in dividends have flowed back to the U.S. Treasury, exceeding the cost of their rescue.
Now, Trump wants to release them from their government leash and let them operate as fully private companies again. From a business angle, it might sound fair. Billionaire hedge fund manager—and prominent Trump ally—Bill Ackman has long argued that it's time for the government to step aside and give shareholders their due. After all, investors like him have money tied up in the common stocks of Fannie and Freddie, which still trade over-the-counter, despite the companies technically being under federal control.
“The purpose of conservatorship is not permanent guardianship,” Ackman said in a January webcast. “It’s a stopgap—an emergency measure—to restructure and return value to creditors and shareholders.”
But while that might make Wall Street cheer, Main Street isn’t necessarily popping champagne.
Danielle Hale, the chief economist at Realtor.com, offered a sobering counterpoint. She argues that privatization could nudge mortgage rates higher. The reason? When Fannie and Freddie are under government conservatorship, there's a perceived guarantee that Uncle Sam will step in if anything goes wrong. That implicit safety net lowers the risk for investors, which in turn keeps rates low for consumers.
“Mortgage rates may rise,” Hale warned, “because investors currently lend with the confidence that the government will backstop any major crisis. That reduces the need for a high-risk premium.”
In plain English: as long as the government stands behind these mortgage giants, your home loan comes with a bit of a discount. Take away that backing, and suddenly lenders may not feel so generous.
And this couldn’t come at a worse time. Since Trump left office during the peak of the pandemic, mortgage rates have climbed from around 2.8% to nearly 7%. That may not sound like much unless you’ve tried to get a mortgage recently. For a couple buying a $400,000 home, that shift means hundreds more in monthly payments, or being priced out entirely.
Trump, for his part, has promised to slash mortgage rates back to 3% or lower if he returns to office. But that’s a tall order for any president. Rates are shaped by complex global forces—everything from inflation and bond markets to Federal Reserve policy. Even if Trump were to privatize Fannie and Freddie, that move wouldn’t magically reduce borrowing costs. In fact, according to Hale, it might do just the opposite.
“You have to ask,” she said, “does this get us to 3% mortgage rates? I think the answer is no.”
This debate isn’t just about financial models or economic theory. It’s about people like the Parkers in Cleveland, who’ve been renting for nearly a decade, always a few steps behind the market. Every time they save up a down payment, home prices surge again or interest rates climb just enough to make the numbers stop working. They don’t care about Ackman’s investment returns or FHFA’s conservatorship guidelines—they just want a fair shot at owning a piece of their neighborhood.
Privatization could also introduce more volatility into the mortgage system. Without government oversight, Fannie and Freddie might take on more risk—or retreat from supporting affordable housing programs. That’s what keeps housing advocates up at night.
And there’s also a deeper philosophical question: Should institutions that play such a vital public role—essentially acting as the backbone of American mortgage finance—be beholden to shareholders, or to taxpayers?
One side argues that the private market is more efficient, more dynamic. The other says housing is too essential to be left to profit motives alone. Both sides have valid points. But for now, what matters most is how these decisions affect ordinary Americans.
Back in Austin, Sarah and Miguel have decided to hold off on buying for now. Their rent just went up again, and with mortgage rates dancing around 7%, they’d be trading one financial headache for another. But they’re still hopeful.
“Maybe things will calm down after the election,” Miguel said, laughing but not entirely joking. “Or maybe we just need to move to a cheaper state.”
Hope, after all, is what the American housing market has always run on. Hope that tomorrow’s interest rate will be better. That next month’s paycheck will stretch further. That one day, you’ll walk through your own front door, turn the key, and know you finally made it.
Whether or not Trump’s privatization plan helps that dream—or makes it harder—is the question that now hangs over the heads of millions. And like his post said: stay tuned.