Freddie Mac, Fannie Mae Draw Bullish Chatter After Report Says US Drawing Up Privatization Plans

Freddie Mac (FMCC) and Fannie Mae (FNMA) stocks drew retail attention on Monday after the Wall Street Journal reported that President Donald Trump’s administration has considered issuing an executive order to privatize the enterprises.

The report said that a Trump ally proposed to the administration earlier in March detailing how the federal government could transfer Treasury’s ownership of the mortgage giants to the sovereign wealth fund that President Trump has pledged to create.

The report follows a statement by U.S. Treasury Secretary Scott Bessent, who suggested the same.

Fannie and Freddie buy mortgages from lenders and either hold these mortgages in their portfolios or package the loans into mortgage-backed securities, with a guarantee of protection from the government regarding any losses.

The federal government gained control of the two companies following the financial crisis of 2008.

The report said that Federal Housing Finance Agency Director Bill Pulte and Bessent have said that any privatization efforts would need to evaluate the effect on mortgage rates.

Trump's allies and other Republicans believe that privatization could lower the country's fiscal deficit and help return money to taxpayers.

According to reports, Freddie Mac’s CEO Diana Reid was terminated last week amid many changes made by Pulte.

One investor asked if the enterprises were released and what the stock prices and dividends could be.

Another user wondered about the ownership division between the state and private investors once the two mortgage firms are moved to the sovereign wealth fund. The trader also expected a share price of $50 for the firms in the medium term.

Freddie Mac and Fannie Mae have gained 66.4% and 94.8% year-to-date (YTD), respectively.

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