FHFA Director Overhauls Fannie Mae, Freddie Mac Boards

The futures of Fannie Mae and Freddie Mac remain up in the air, but a Trump appointee is already making major shakeups.

The Federal Housing Finance Agency, under its new director Bill Pulte, removed eight members from the Fannie Mae board and six members from the Freddie Mac board on Monday, the Wall Street Journal reported. Four new members were appointed to each board, including Pulte, who will chair both boards.

These moves come only three days after Pulte was sworn in as director of the FHFA. Donald Trump tapped the private equity businessman to serve as the nation’s top housing regular two months ago.

The mortgage giants have been under government control since the housing bubble burst in 2008. Chatter about taking them back private has persisted over the years but has yet to result in action.

During Trump’s first administration, there was an effort to take the two enterprises private once more. That attempt was dropped in the waning days of his presidency, however, and Joe Biden’s incoming administration didn’t pursue it, instead shifting attention towards improving housing affordability and ownership.

Earlier this year, the FHFA and the Treasury Department agreed to amend the senior preferred stock purchase agreements between the Treasury and the two enterprises, according to CNBC. This was viewed as a step towards the eventual release of Fannie Mae and Freddie Mac from government control.

Should the enterprises go private, the ramifications could be myriad. Mortgage rates may jump, for example, depending on how the transition unfolds. Investors of mortgage-backed securities could also face bigger risks without the government backstop.

Fannie Mae and Freddie Mac support approximately 70 percent of the country’s mortgage market, according to the National Association of Realtors.

Pulte told CNN last week that privatizing the two enterprises is not a top priority, though he added that they “shouldn’t be in conservatorship forever.” Instead, keeping in line with Trump’s overall mandate, Pulte said he is focusing on finding and eliminating fraud within the companies.

— Holden Walter-Warner