Is it possible for the GSEs to exit conservatorship without market disruption?

"The GSEs' possible release and the timing of a change is the topic of much speculation. Recent commentary from U.S. Department of Commerce Secretary Howard Lutnick, who appeared on CNBC in September, said that the administration's plans for an initial public offering (IPO) could well be this year sooner than people think. Lutnick said that only a small portion of the mortgage giants, which have been under federal conservatorship since the 2008 financial crisis, would be sold to the public."

"Speaking at HousingWire's Mortgage Banking Summit, Pete Mills, senior vice president of residential policy at the Mortgage Bankers Association, and Rob Zimmer, director of external affairs at the Community Home Lenders of America said the conversation in Washington has shifted from whether to end conservatorship to how to do it while protecting taxpayers and maintaining market stability. There's a deal track and a market stability track, Mills said."

"Both Zimmer and Mills said any equity sale or secondary offering of GSE stock would likely require Fannie and Freddie to exit conservatorship under a consent order a structured agreement that would impose benchmarks and restrictions while allowing limited private investment. At some point, if they're serious about selling equity, they've got to be out of conservatorship, Zimmer said. Zimmer added that maintaining two separate GSEs remains critical for competition and access to the secondary mortgage market, particularly for community lenders."

Administration plans for a limited initial public offering of the mortgage giants could occur this year, with only a small portion sold to the public. Fannie Mae and Freddie Mac have remained under federal conservatorship since the 2008 financial crisis. Policy focus in Washington has shifted from whether to end conservatorship to how to do so while protecting taxpayers and preserving market stability. Transition plans emphasize a deal track and a market stability track, require exit under a consent order for any equity sale, and mandate updated regulatory frameworks to ensure consistent guarantee fees, clear market boundaries, and operational safeguards.

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