02 June 2025

Mortgage Mentor: Let’s Talk Fannie Mae & Freddie Mac

This is a great time to review a little history of these two government-sponsored enterprises (GSEs). Currently, Fannie Mae and Freddie Mac support approximately 70% of the U.S. mortgage market, and there have been many recent headlines suggesting that the 2025 Trump administration may be pursuing efforts to end their federal conservatorship—which has been in place since the 2008 financial crisis.

How do Fannie Mae & Freddie Mac support the housing and mortgage industries?

When you take out a mortgage to buy a home, your loan is likely backed by one of these large government-sponsored companies: Fannie Mae or Freddie Mac. These organizations don’t lend money directly to homebuyers—instead, they buy mortgages from lenders like banks and mortgage brokers (like me!). This process allows lenders to free up funds and continue offering new loans. Fannie Mae and Freddie Mac help keep the mortgage market stable, making it easier for more people to qualify for home loans with predictable terms and competitive interest rates.

After purchasing mortgages, Fannie Mae and Freddie Mac bundle them together and sell them as investments called mortgage-backed securities. Investors who buy these securities receive regular payments, while Fannie and Freddie guarantee those payments—even if a homeowner misses one. This system helps keep money flowing through the housing market, reduces borrowing costs, and makes homeownership more accessible for millions of Americans.

What does it mean that Fannie Mae & Freddie Mac are under “conservatorship”? 

Fannie Mae and Freddie Mac have been under federal control since 2008, in a situation known as conservatorship. This was a response to the financial crisis, when both companies suffered massive losses due to the collapse of the housing market. To prevent a total failure and stabilize the mortgage system, the federal government intervened through the Federal Housing Finance Agency (FHFA), which took over their operations. While they still technically operate as private companies, the conservatorship means they remain under government oversight to protect taxpayers, preserve market stability, and ensure continued access to affordable home financing. Today, they continue to play a vital role in helping Americans achieve homeownership—even as the long-term question of their future remains open for debate.

Why are Fannie Mae & Freddie Mac in the headlines today? 

The 2025 Trump administration is actively working to end the federal conservatorship of Fannie Mae and Freddie Mac. President Trump has stated his intent to return the companies to private ownership, while maintaining an implicit government guarantee to support market confidence. FHFA Director Bill Pulte supports this direction, emphasizing that any exit must be carefully managed to protect the safety and soundness of the housing market and avoid upward pressure on mortgage rates.

However, Mat Ishbia, CEO and Chairman of United Wholesale Mortgage (UWM), recently commented that he believes despite the headlines, it’s unlikely the administration will make any major changes in the immediate future. With interest rates continuing to rise, and both the administration and Director Pulte expressing a desire to see rates come down, Ishbia suggests that no big moves—such as ending conservatorship—will be made if they risk further disrupting the rate environment.

 

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