President Donald Trump is considering holding a public offering for mortgage giants Fannie Mae and Freddie Mac
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as soon as this year. The details will be critical for shareholders, mortgage borrowers, and holders of the companies’ mortgage bonds.
Trump over the past few weeks met with the chief executives of banks including Citigroup, Bank of America, Goldman Sachs and JPMorgan Chase to discuss a potential stock offering of Fannie and Freddie, according to a senior administration official. The offering could be held as soon as this year, and “the President is weighing all his options,” the official said.
Shares of Fannie Mae rose about 20% to $10 as of midday Friday, while shares of Freddie Mac rose 19% to $7.85, after The Wall Street Journal earlier reported that Trump was considering the move.
Fannie and Freddie don’t make mortgages themselves. They buy them from lenders, wrap them into mortgage-backed securities, and make guarantees to make the bond investors whole in case borrowers default. The companies failed during the 2008 financial crisis, and the government put them into a so-called conservatorship managed by the Federal Housing Finance Agency. Since then, the White House and lawmakers have tried and failed multiple times to find a way to bring the companies out of government control. |
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