Two pillars of the US mortgage market, Fannie Mae and Freddie Mac, are currently managed by the federal government. Parts of Washington, DC hope that President Trump will push for the end of parents.
“We have a mortgage finance system that works very well with benefits, but are you ready for a recession?” From 2019 to 2021, Mark Calabria, former director of the Federal Housing Finance Agency. said.
Fannie Mae and Freddie Mac create financial products that support the mortgage market and reduce the risk of investors. These products may affect your US mortgage rate
The two companies became government guardians in September 2008 due to the rising global financial crisis. In the aftermath, many borrowers defaulted on their mortgages and risked losing their homes. Between 2007 and 2010, roughly 3.8 million homes were lost to foreclosure, according to estimates from the Federal Reserve Bank of Chicago.
At the time, the Treasury was trying to extend its $100 billion in credit to Fannie and Freddie, and keeping each. The Treasury has also begun a profit sweep to repay taxpayers’ bail.
“In my mind, it was a good decision,” said Mark Zandy, Moody economist.
Meanwhile, Fannie and Freddie paid the Treasury $301 billion. As the process unfolded, the value of Fannie and Freddie stocks essentially did nothing.
Fannie Mae and Freddie Mac stock performance against the S&P 500 index from 1980 to 2025. Stock prices of the two mortgage market companies plummeted dramatically when they entered government reserves in 2008.
In 2019, the government ended its profit sweep for Fannie and Freddie, laying the foundation for the two mortgage giant’s return to the private market.
“Our number one constraint was the lack of capital. They had little capital as Fanny and Freddie were leveraged at about 1,000-1,” Calabria said.
Both companies are now known as government sponsored companies, or GSEs. Fannie May was officially recognized as a government agency in 1938 and became a private organization in 1968. Freddie Mac was founded in 1970 by the Act on Parliament as a private company.
Mark Zandy estimates that mortgage rates could rise by 60 to 90 basis points without the explicit or implicit government backstop of the mortgage giant. Privacy supporters like Calabria have said it won’t raise prices and can even lower them.
Watch the video above to learn how the end of Fannie and Freddie’s parents will affect home buying in the US
