US president Donald Trump has vowed to maintain the federal government’s mortgage guarantees and oversight responsibilities for Fannie Mae and Freddie Mac as he works to transition the government-sponsored enterprises (GSEs) toward public ownership. “I am working on TAKING THESE AMAZING COMPANIES PUBLIC, but I want to be clear, the U.S. Government will keep its implicit GUARANTEES, and I will stay strong in my position on overseeing them as President,” Trump said in a post on Truth Social. Fannie Mae (Federal National Mortgage Association) and Freddie Mac (Federal Home Loan Mortgage Corporation) have operated under government conservatorship since being bailed out during the 2008 financial crisis. While they are now profitable and operate as for-profit companies with private shareholders, the US Treasury still holds preferred shares and warrants representing about 80% of their common stock. The prospect of privatization has energized investors, causing shares in both GSEs to surge last week following Trump’s earlier comments about exploring a public offering. “This at least takes off the table one of the scenarios that investors had really worried about,” Tracy Chen, portfolio manager at Brandywine, told Bloomberg. However, the president’s explicit support for retaining government guarantees addresses a concern about whether privatization could strip Fannie and Freddie of their status as implicitly backed by the federal government. Mortgage professionals and investors in the $9 trillion agency mortgage-backed securities (MBS) market have warned that losing this…Read more