"The window for Fannie Mae and Freddie Mac to be returned to the private sector appears to be narrowing, with a low probability of it happening before the midterms election in November, according to analysts at Keefe, Bruyette & Woods (KBW)."
"In order for privatization to succeed, the administration needs to take action to address key issues, such as capital levels, the treatment of the government's senior preferred (stock), and the nature of the implicit guaranty."
"If much of the work isn't done in 2027, it will probably be challenging in 2028 as the administration's focus shifts to the 2028 presidential election."
"KBW said net interest income for Fannie and Freddie is projected to rise amid an expected $200 billion increase in their retained portfolios, as announced by Trump in January."
Analysts at KBW indicate that the chances of privatizing Fannie Mae and Freddie Mac are diminishing, particularly before the November 2026 midterms. The focus has shifted away from GSE privatization due to other political priorities. Key unresolved issues include capital levels and the treatment of senior preferred stock. If these issues are not addressed by 2027, privatization efforts may face significant challenges as attention turns to the 2028 presidential election. Meanwhile, Fannie and Freddie are expected to see an increase in net interest income due to portfolio growth.
Read at www.housingwire.com
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