Fannie Mae and Freddie Mac, two mortgage giants that have been under US government control since 2008, saw their shares surge to multi-year highs on Friday following a framework revealed by federal agencies for their “orderly” release from conservatorship. The US Treasury Department and Federal Housing Finance Agency (FHFA) announced that they had amended their agreements with the companies to ensure a smooth exit from conservatorship, which would mark a key milestone for Fannie and Freddie.
The two government-sponsored enterprises (GSEs) were created to support the housing market by ensuring affordable mortgage financing, but were severely bruised during the 2008 financial crisis and were bailed out with taxpayer funds. The Treasury received preferred shares in return, which paid billions of dollars in dividends over the years. Since then, efforts to return them to private control have continued, including under the first administration of President Donald Trump.
The latest update comes just weeks before Trump is set to take office for a second term, and analysts have echoed similar sentiments, with one notable exception. Bill Ackman, a billionaire investor, said he expects the incoming administration to remove the GSEs from conservatorship. Fannie’s shares were last up 24.4% to $4.23, hitting their highest level since 2017, while Freddie Mac climbed 23.2% to $4.15, reaching levels not seen in over eight years.
