Pulte says Fannie, Freddie to remain in conservatorship with IPO plans

"Lambert quoted Pulte as saying: I anticipate that the president will make a decision either this quarter or early next year as it relates to the IPO. The future of Fannie and Freddie has been a hot topic in President Trump's second term as the two government sponsored enterprises spend their 17th year in conservatorship following the great financial crisis."

"Releasing them from that conservatorship is complicated, since they now backstop about 70% of all mortgage loans in the U.S., providing liquidity and stability in the market. Privatizing Fannie and Freddie would take years, experts say, because it will require addressing their regulatory capital requirement shortfall, the status of Treasury's senior preferred shares and the current implicit guarantee. Selling some shares while they remain in conservatorship would be an easier option."

"In May, Trump said he was giving serious consideration to bringing Fannie Mae and Freddie Mac public and would make a decision in the near future. A week later he clarified that any change would keep the implicit guarantee intact. In July, Trump met with CEOs of some of the country's biggest banks, including JP Morgan Chase CEO Jamie Dimon, Goldman Sachs Group CEO David Solomon, and Bank of America CEO Brian Moynihan, to one-on-one pitch meetings to discuss the future of the GSEs."

Officials expect a presidential decision on an IPO either this quarter or early next year. Fannie Mae and Freddie Mac remain in conservatorship in their 17th year since the financial crisis and backstop roughly 70% of U.S. mortgage loans, providing market liquidity and stability. Releasing them from conservatorship would be complicated and could take years because of regulatory capital shortfalls, the status of Treasury's senior preferred shares, and the implicit government guarantee. Selling some shares while conservatorship remains would be easier. The administration has signaled interest in taking the GSEs public, met with major bank CEOs, and estimated an IPO could raise about $30 billion, though merger speculation has drawn industry pushback.

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