President Trump has publicly signaled his intent to privatize Fannie Mae and Freddie Mac, the two government-sponsored enterprises (GSEs) that play a central role in the U.S. housing finance system. In a recent post on Truth Social, Trump said he is “giving very serious consideration to bringing Fannie Mae and Freddie Mac public.” This marks the second time in recent years that he has expressed this intent. The first time was during his initial term in office.
The first attempt, in 2019, was part of a broader effort to reshape financial and housing policy. That effort ultimately stalled in the face of regulatory and market headwinds. Now, in 2025, Trump has renewed the call. These recent remarks were followed by additional public statements and reposts from Federal Housing Finance Agency (FHFA) Director Bill Pulte, who has voiced strong support for ending the GSEs’ conservatorship.
Potential Increased Borrowing Costs
The Low-Income Housing Tax Credit (LIHTC) industry has relied on equity investments and credit support provided by Fannie Mae and Freddie Mac. Although their market share in LIHTC equity declined after the 2008 conservatorship, recent Federal Housing Finance Agency guidance raised their annual LIHTC investment caps to $1 billion each. However, the push towards privatization could alter the GSEs operations toward higher-return activities that may reduce or even eliminate their participation in low-yield affordable housing deals.
While private investors could replace some of this activity, they are unlikely to fully replace the GSEs’ contribution, particularly in rural or high-need markets. These areas typically depend on mission-driven underwriting and patient capital, which are traits that are less common in purely profit-oriented environments.
On the debt side, the GSEs’ federal guarantee keeps borrowing costs low. Eliminating that guarantee could raise interest rates on both construction and permanent financing. And even small increases in debt pricing will have outsized impacts on affordable housing.
Tax-exempt bond deals, which are important to 4 percent LIHTC projects, could also change if GSEs were to privatize. These bonds depend heavily on credit enhancement from GSEs to attract investors. Under a privatized model, bond yields could rise, which would reduce net proceeds.
Future LIHTC Financing
Privatization may bring about new forms of innovation in mortgage finance, but the LIHTC industry would bear the cost of the transition. Reduced GSE participation in equity markets, combined with rising debt costs would immediately narrow the pipeline of viable LIHTC deals.
Currently, lawmakers are approaching the push for GSE privatization with caution. Members of the Senate Banking, Housing, and Urban Affairs Committee are divided largely along party lines. While many Republicans support the idea of ending federal conservatorship, they emphasize the need for clear oversight and a carefully managed transition. Senator Kevin Cramer of North Dakota, for instance, said he wants to see a concrete plan and a deliberate approach to implementation. Senator Mike Rounds of South Dakota called the move a “step in the right direction” but echoed the need for restraint.
Democrats have been more skeptical. Senator Mark Warner of Virginia warned that mishandling the transition could further destabilize a housing market already suffering from inadequate supply. And Senator Elizabeth Warren highlighted the complexity of the undertaking during FHFA Director Pulte’s confirmation hearing, raising concerns about long-term consequences for the housing finance system.