U.S Stock market's one of most consequential IPOs: How shares sell of Fannie Mae, Freddie Mac could reshape America's $12 trillion mortgage market

Core Viewpoint - The initial public offering (IPO) of Fannie Mae and Freddie Mac, two government-controlled mortgage giants, is still in progress six months after discussions began, with significant decisions regarding their future control and role in the housing market yet to be made [1][2][15]. Group 1: IPO Progress and Government Control - Trump met with major investment banks to discuss the IPO, which was expected to happen quickly, but it remains a work in progress [1][2][15]. - The government has hired a law firm for advice but has not appointed a major Wall Street bank to manage the offering [2][15]. - A critical decision is whether Fannie and Freddie will be released from government control after the IPO, as they were taken over during the 2008 financial crisis [3][15]. Group 2: Role in the Mortgage Market - Fannie and Freddie are essential in the $12 trillion mortgage market, buying mortgages and packaging them into bonds for institutional investors, which helps banks free up capital for more loans [3][6][15]. - Investors may be hesitant about the IPO if the firms remain under government control, as this could conflict with private shareholders' interests [6][15]. Group 3: Political and Economic Context - Trump aims to boost housing affordability through lower mortgage rates, making it a key policy goal amid midterm election pressures [7][15]. - The administration's recent decision to have Fannie and Freddie purchase up to $200 billion in mortgage-backed bonds suggests a reluctance to end government conservatorship soon [7][15]. - Experts believe that if Fannie and Freddie are freed from federal control, it would limit the administration's ability to influence housing affordability measures [8][15]. Group 4: Perspectives on Future Structure - Jim Parrott suggests that the administration views Fannie and Freddie as utilities, which may delay any decision to relinquish control [9][15]. - David M. Dworkin emphasizes the need for transparency and consultation with industry stakeholders before ending government conservatorship [10][15]. - Treasury Secretary Scott Bessent is cautious about a hasty IPO, preferring to maintain the status quo to avoid disrupting the mortgage market [11][15]. Group 5: Current Mortgage Rates - The current rate on a traditional 30-year mortgage is 6.06%, down approximately one percentage point from a year ago [11][15].