Housing finance reform remains the last major piece of unfinished business from the financial crisis. With renewed momentum from the second Trump administration—including public statements by President Donald Trump, Treasury Secretary Scott Bessent, and Federal Housing Finance Agency (FHFA) Director Bill Pulte, the time is ripe for a durable, nonpartisan solution. President Trump’s post on Truth Social on May 21 and May 27, 2025, make clear that addressing the conservatorships of Fannie Mae and Freddie Mac (the Enterprises) is a priority that is being discussed now. Director Pulte has also posted regularly on X, noting the President’s involvement and FHFA’s intention of preparing Fannie Mae and Freddie Mac for release from conservatorship when the President orders it. On June 17, Director Pulte will chair a meeting of the Federal Housing Finance Oversight Board, including Secretary Bessant, HUD Secretary Scott Turner, and Securities and Exchange Commission Chairman Paul Atkins. While some have suggested the administration isn’t serious about moving forward this year, I would suggest when the President of the United States goes into technical detail about a major policy issue – not once but twice in a single week – and assigns multiple cabinet officers to address an issue, it’s already moving forward.
On May 21 President Trump said, “I am giving very serious consideration to bringing Fannie Mae and Freddie Mac public. I will be speaking with Treasury Secretary Scott Bessent, Secretary of Commerce Howard Lutnick, and the Director of the Federal Housing Finance Agency, William Pulte, among others, and will be making a decision in the near future. Fannie Mae and Freddie Mac are doing very well, throwing off a lot of CASH, and the time would seem to be right. Stay tuned!”
On May 22, FHFA Director Pulte, appearing on Donald Trump, Jr.’s TRIGGERED podcast, said Fannie Mae and Freddie Mac were “not suppposed to be in conservatorship forever. It shouldn’t be in conservatorship forever. However, what we’re focused on now is trying to get it back to its original roots. Providing liquidity, stability and affordability.”
On Friday, May 23, Treasury Secretary Bessent said privatization of Fannie Mae and Freddie Mac “is a goal for this administration. Again, we’re doing peace deals, tax deals, and trade deals. As we land some of those deals, then we will focus on that. But what I can tell you is that we are doing a great deal of studying at Treasury because the one requirement for this privatization is that they are privatized in such a way that mortgage spreads do not widen.”
On May 27, President Trump followed up on his original post, adding “Our great Mortgage Agencies, Fannie Mae and Freddie Mac, provide a vital service to our Nation by helping hardworking Americans reach the American Dream — Home Ownership. I am working on TAKING THESE AMAZING COMPANIES PUBLIC, but I want to be clear, the U.S. Government will keep its implicit GUARANTEES, and I will stay strong in my position on overseeing them as President.”
On May 29, FHFA Director Pulte said on FOX News that “we’ve got to clean up the capital structure, and that’s what President Trump is looking at. He will still be in control. It will still be a very prominent company for the government. However, we are really focused on driving operational improvements, and really making these great American icons, once again.”
We have been told that staff at the White House and Treasury Department are already framing out what release from conservatorship might look like. While the first Trump administration held deep and frequent consultations with stakeholders on a variety of issues like reform of the Dodd Frank Act and modernization of the Community Reinvestment Act, that approach has not been embraced by the second Trump administration. That’s unfortunate as the complexity of housing finance reform is impossible to fully quantify, the risk of lasting damage to the housing economy is potentially catastrophic, and the knowledge of a broad range of stakeholders is deep and informed by decades of experience. The principal challenge with housing finance reform is that many people are experts in one or two pieces of this complex puzzle, but no one is an expert in all of them. Further, many of the areas that present the most challenges overlap and have inherent conflicts of interest.
NHC published a major paper on housing finance reform in 2019, after months of consultation with a broad range of stakeholders, including Chris Tawa Consulting, Enterprise Community Partners, Federal Home Loan Bank of Chicago, LISC, Mortgage Bankers Association, National Association of Affordable Housing Lenders, National Association of REALTORS®, National Community Reinvestment Coalition, National Council of State Housing Agencies, National Low Income Housing Coalition, NeighborWorks America, New York University Furman Center, Opportunity Finance Network, SKA Marin, Stewards of Affordable Housing for the Future, Tennessee Housing Development Authority, ULI Terwilliger Center for Housing, Quicken Loans, and Zigas and Associates, LLC.
This year, we have launched a similar effort with over 100 stakeholders, including former regulators, senior officials from both the Obama and Trump administrations, former CEO’s of Fannie Mae, Freddie Mac, mortgage insurance and financial services corporations, and consumer, civil rights, fair housing and affordable housing advocates. This group is examining what approaches to administrative reform, recapitalization, and release from conservatorship would be safe and effective under the current Trump administration, including the opportunities and risks of using a U.S. Sovereign Wealth Fund to manage, exercise, and sell the Treasury Department’s warrants, that are the basis of the government’s ownership of the Enterprises.
NHC supports a pragmatic, stability-focused pathway for housing finance reform centered on the concurrent recapitalization and administrative release of the Enterprises from conservatorship, as discussed in detail in our 2019 paper. This approach builds on the robust regulatory foundation of the Housing and Economic Recovery Act of 2008 (HERA), preserves the existing statutory affordable housing mandates, and ensures market liquidity and confidence. The goal of and transition from conservatorship should offer a gradual, transparent mechanism for divestiture, mitigating market disruption, and optimizing taxpayer returns. It is also essential that any windfall from the sale of the government’s stake in the Enterprises be dedicated, at least in part, to affordable housing priorities. These could include supplemental commitments to the Housing Trust Fund and Capital Magnet Fund; significant investments in technology improvements at Ginnie Mae, the Federal Housing Administration, Fannie Mae, and Freddie Mac; full funding over ten years for the Affordable Housing Credit Improvement Act and the Neighborhood Homes Investment Act, and relieving low- and moderate-income first time homebuyers of the burden of paying tax on Employer Assisted Housing grants and loan forgiveness.
NHC’s vision for ending the Enterprises’ conservatorship leverages the strengths of HERA and prioritizes market stability, broad access, and affordability. We strongly agree with Secretary Bessent’s foundational principles and first official administration statement on the matter on February 7, “The priority for a Fannie and Freddie release, the most important metric that I’m looking at is any study or hint that mortgage rates would go up. Anything that is done around a safe and sound release [of Fannie Mae and Freddie Mac] is going to hinge on the effect of long-term mortgage rates.” Yet without action to move the Enterprises out of conservatorship, we are effectively chosing in perpetuity, a nationalized housing fiance model that effectively operates as a utility with full government control.
It is essential that any changes to the status quo preserve or enhance six aspects of a healthy market for both single family and multifamily housing. After sixteen years of government conservatorship and numerous failed efforts to “reform” the U.S. housing finance market, it is increasingly clear that an approach that builds upon the major reforms enacted in HERA should be the cornerstone of the transition. This legislation has long been underappreciated, in part due to the fact that it was almost immediately utilized to create a new, more powerful and agile regulator, and move the Enterprises into conservatorship. Any movement out of conservatorship, along with any subsequent reforms, must guarantee the following aspects of the status quo ante.
- Maintain and enhance mortgage funding liquidity and the To-Be-Announced (TBA) market, its crown jewel;
- Ensure broad and reliable access to mortgage credit;
- Preserve, modernize and strengthen access and affordability;
- Improve on the pre-conservatorship implicit guarantee structure;
- Avoid competition with FHA and Ginnie Mae that weakens the government-backed mortgage finance system; and
- Mitigate adverse market and consumer impacts with a smooth, transparent transition.
The path to meaningful housing finance reform remains one of the most consequential—and unfinished—legacies of the financial crisis. NHC’s framework for housing finance reform is grounded in the principles of stability, access, affordability, and prudent risk management. The transition to a reformed system should be deliberate and transparent, leveraging existing regulatory authorities where possible and engaging stakeholders across the housing ecosystem. Ultimately, bipartisan cooperation will be essential to enact durable legislative solutions that balance market stability, taxpayer protection, and broad access to homeownership and rental opportunities. Administrative release of the Enterprises from conservatorship offers a viable path to transition the Enterprises to private ownership while maintaining systemic stability and optimizing taxpayer returns. After 16 years of conservatorship, it is as good a time as any to pursue this initiative, providing we do it right.