Housing Finance Update: What Trump’s Proposal Means for Mortgage Rates

Keeping you informed is part of what I do—and there’s some national housing finance news worth watching.

Former President Trump recently proposed taking Fannie Mae and Freddie Mac public again, two key institutions that play a massive role in keeping mortgage money flowing across the country.

But here’s the twist: he says they’d still remain under federal oversight and backed by government guarantees.

🧠 Quick Refresher: Who are Fannie and Freddie?

These two government-sponsored enterprises (GSEs) buy loans from lenders and package them into mortgage-backed securities, which helps keep interest rates relatively low and financing accessible for everyday buyers.

Since the 2008 financial crisis, they’ve been under government conservatorship—essentially federal management. Trump’s new proposal would allow their shares to be traded publicly again, while still keeping the government involved.

🔍 Why This Matters:

• Short term? Not much changes. Experts believe the impact on mortgage rates or loan availability will be minimal for now.

• Long term? If federal backing were ever removed or the GSEs were fully privatized, rates could climb. Investors would likely demand higher returns to offset the added risk, and that would trickle down to buyers in the form of higher borrowing costs.

📌 What This Means for You:

For now, it’s business as usual. But if you’re planning a home purchase or refinance in the near future, it’s always wise to keep an eye on the bigger picture.

I’ll be watching these developments closely, and if anything shifts that could affect your buying power, I’ll make sure you’re the first to know.

Have questions about how national policy might affect your next move? I’m just a message away.

What is Fannie Mae/Freddie Mac?

If you've ever applied for a mortgage, there's a good chance your loan was touched by Fannie Mae or Freddie Mac—even if you never saw their names on the paperwork. So who are these mysterious-sounding entities, and what do they have to do with buying a home?

Let’s break it down.

👥 Meet Fannie & Freddie (No, They’re Not People)

Fannie Mae (Federal National Mortgage Association) and Freddie Mac (Federal Home Loan Mortgage Corporation) are government-sponsored enterprises (GSEs). Their main job? Keep mortgage money flowing so lenders can continue to offer home loans.

They don’t lend money directly to consumers. Instead, they:

• Buy mortgages from lenders after the loan is closed

• Bundle those loans into mortgage-backed securities

• Sell those securities to investors around the world

This process frees up cash for lenders, allowing them to make more loans—keeping interest rates more stable and credit more available.

🛠️ Why This System Exists

Without Fannie and Freddie, many banks wouldn’t have the liquidity to offer 30-year fixed-rate loans or low down-payment options. The secondary mortgage market they support is the engine that makes affordable homeownership possible for millions of Americans.

🧯 What Happened in 2008?

During the financial crisis, both companies faced major losses due to risky lending practices and collapsing home prices. In response, the U.S. government took them into conservatorship—a fancy way of saying "we're stepping in to stabilize things."

They’ve been under federal control ever since, which has led to years of political debate about whether they should remain that way, return to private ownership, or be replaced altogether.

💡 Why It Matters to You

Even though you don’t apply for a mortgage from Fannie or Freddie, the type of loan you get might be backed by them. In fact, most conventional loans are!

Their guidelines affect:

• Minimum credit scores

• Down payment requirements

• Debt-to-income ratios

• Loan limits

They also help keep mortgage rates more competitive by lowering the risk for lenders.

📌 The Bottom Line

Fannie Mae and Freddie Mac might be behind the scenes, but they play a huge role in how affordable, available, and stable mortgage financing is in the U.S.

As always, if you’re not sure whether your loan is conventional, government-backed (like FHA or VA), or something else entirely—I’m here to help you navigate it all and make smart moves in any market.