The Future of Fannie Mae & Freddie Mac
The Federal Housing Finance Agency (FHFA) just released a draft of its five-year strategic plan, and it’s already stirring conversation across the housing industry. The agency is inviting public feedback as it outlines its roadmap for overseeing Fannie Mae, Freddie Mac, and the Federal Home Loan Banks — all of which play a central role in keeping the U.S. housing market running smoothly.
A Push Toward Deregulation?
One of the most notable takeaways from the plan is the FHFA’s intention to review and potentially roll back certain regulations that are seen as outdated or overly burdensome. The agency stated that it will align with federal executive orders aimed at promoting economic growth through deregulation.
While that may sound like a major policy shift, housing experts say not to overreact just yet. As Dennis Shea of the Bipartisan Policy Center pointed out, the agency regularly updates its strategic plan, and this appears to be more of a routine refresh than a dramatic overhaul — though the tone does reflect the current administration’s preference for loosening federal control.
The Long Debate Over Conservatorship
For context, Fannie Mae and Freddie Mac have been under federal conservatorship since the 2008 financial crisis, when the government stepped in to stabilize the mortgage market. Over the years, there have been repeated discussions — including under the Trump administration — about returning the two mortgage giants to private ownership.
The challenge? It’s complicated. Moving Fannie and Freddie out of federal hands would require them to meet strict capital requirements and prove they could stand on their own without putting taxpayers at risk. That’s a tall order, and so far, no administration has managed to make it happen.
As Ben Sampson, a researcher at Stanford University, noted, any such transition would need to be approached cautiously: “The FHFA has been consulting with a range of stakeholders, and ideally, that input will help guide an informed decision about Fannie and Freddie’s path forward.”
Why It Matters to Homebuyers
Changes to Fannie Mae and Freddie Mac don’t just affect policymakers — they have real-world impacts on borrowers. A study from Stanford’s Institute for Economic Policy Research suggests that privatizing these entities could lead to higher mortgage rates. Why? Private companies would likely need to raise capital, charge new fees, and operate with less government backing — costs that would eventually trickle down to homebuyers.
Researchers estimate that mortgage rates could climb anywhere from 0.2% to 0.8%, which could add $500 to $2,000 per year to the typical mortgage payment. Over the life of a 30-year loan, that’s a significant increase.
Balancing Risk and Stability
There’s also concern that loosening oversight too much could recreate the conditions that led to the 2008 crash. As housing analyst Jack McCabe cautioned, deregulation always comes with risk: “If we go back to how things were before, we could end up repeating past mistakes. Without strong oversight, greed can take over — and that never ends well.”
For now, the FHFA says Fannie and Freddie will remain under conservatorship, with the agency continuing to oversee their boards and safeguard taxpayer interests.
Bottom line: While the FHFA’s new plan doesn’t immediately change the status of Fannie Mae or Freddie Mac, it opens the door for future discussions about their long-term independence — and with it, potential ripple effects across the mortgage market.