Pricing Workers Out Of The Housing Market, Putting Taxpayers At Risk So Gamblers Can Make A Killing

Trump’s Housing Heist: Privatizing Fannie & Freddie To Line Billionaires’ Pockets

Yesterday, Amelia Pollard reported that the Trump regime plans to privatize mortgage giants Fannie Mae and Freddie Mac this year  move that would affect the functioning of the US mortgage market and create a windfall for hedge funds. The announcement came in the form of a Truth Social trial balloon post. “Fannie and Freddie,” wrote Pollard, “are crucial to the vast market for US home loans, by buying and repackaging mortgages. They were created by the government and later transferred to shareholder ownership with an implicit guarantee that the state would intervene if they ran into trouble. They collapsed back into government control during the 2008 financial crisis with a $189 billion bailout, and have since remained in conservatorship. They failed after guaranteeing lower quality mortgages, which led to huge losses when the housing bubble burst.”

The housing bubble didn’t just burst on its own. It burst because of rampant greed by the same types Trump will try selling the two agencies to again. Wall Street speculators and politically connected billionaires who treat housing not as a human need but as a casino chip. Handing Fannie and Freddie, which control around 70% of the housing market (so way too big to allow to fail), back to these vultures isn’t even remotely about “reform.” It’s a prelude to another taxpayer-funded rescue when, inevitably, their reckless bets go bad. To make matters worse, “Trump,” wrote Pollard, “has previously said that the ‘implicit guarantees’ from the government would still remain even if the companies were taken public through a stock offering. The White House has not elaborated on how that backstop would be structured if they were publicly listed.

Hedge fund billionaires Bill Ackman and John Paulson have long predicted that the two entities will eventually return to shareholders, and both are expected to make a windfall if they do. Fannie and Freddie, which trade on the decentralised “over the counter” market rather than mainstream Wall Street exchanges, have surged 795 per cent and 646 per cent in the past year respectively.

Fannie and Freddie currently benefit from an implicit government guarantee, which allows them to borrow at lower rates in capital markets. This reduces the cost of mortgage-backed securities, keeping mortgage rates affordable. Privatization could remove or weaken this guarantee, increasing borrowing costs for them so you can count on investors demanding higher yields to compensate for greater risk, which would be passed on to consumers through higher mortgage rates. Experts estimate privatization could raise mortgage rates by 0.43% to 0.97%, adding $730 to $1,670 annually to the average homeowner’s mortgage costs. Some analyses suggest rates could rise by up to 90 basis points, exacerbating affordability challenges in an already strained housing market with rates near 7%.

Obviously, higher mortgage rates would make homeownership less accessible, particularly for first-time buyers and those with lower incomes, deepening the already catastrophic affordability crisis. Any disruption in the secondary mortgage market could limit lenders’ ability to offer loans, potentially freezing credit availability and destabilizing the housing sector, which underpins a significant portion of the U.S. economy.

But there re more reasons why this Republican Party mania with privatization in the housing market is a terrible idea. For one thing, Fannie and Freddie stabilize the mortgage market by buying loans from lenders and packaging them into mortgage-backed securities, ensuring liquidity for 30-year fixed-rate mortgages. Privatization without a clear government backstop could spook investors, reducing demand for mortgage-backed securities and disrupting the flow of mortgage credit. An abrupt or poorly managed transition— and we are talking about the Trump administration here, so that is a given— would lead to market volatility, as seen during the 2008 financial crisis when their collapse necessitated that disastrous $187 billion bailout.

Are you a member of “an underserved community?” Fannie and Freddie set lending standards and support programs for first-time homebuyers, low-income borrowers and underrepresented communities. Privatization would prioritize profit-driven motives, leading to the elimination of these programs, especially given the Trump regime’s racist  emphasis on ending diversity-related incentives. Do I have to tell you that terminating, even even just scaling back these programs, would disproportionately harm younger buyers and people of color?

Privatization without robust regulation— which isn’t exactly something Republicans are interested in— would reintroduce the bad old days, with Freddie and Fannie facing relentless  pressure to maximize shareholder value over market stability. A return to risky lending practices would inevitably lead to another financial crisis, with taxpayers bearing the cost of the bailout.

Aside from first-time and low-income home buyers finding homeownership unaffordable and being priced out of the market, current homeowners looking to refinance would face higher rates, increasing their borrowing costs. Those with adjustable-rate mortgages or nearing the end of fixed-rate periods would likely see significant payment increases. Meanwhile, this is all going to slow home sales and construction, impacting real estate agents, developers, dozens of related industries and the entire economy.

On the other hand, privatization would be a massive windfall for investors holding Fannie and Freddie stock— like Trump cronies Bill Ackman and John Paulson— with a public offering significantly boosting their share prices. Ackman has said he sees over $300 billion in profits generated, just hype but there will be a lot generated even if nowhere near that much. Since the 2008 bailout, Freddie and Fannie profits have gone to the Treasury rather than shareholders and privatization would restore dividend payments to vulture investors.

Lehigh County controller, Mark Pinsley, the progressive Democrat taking on Ryan Mackenzie in the Lehigh Valley, told us this morning that “Trump and Mackenzie are trying to help Wall Street win at the expense of ordinary people. As the District has its share of first time buyers this could chill homeownership aspirations, once again tearing the American dream away from our citizens.”

And, like I said, that’s the real point of all this— not “fixing” the housing market, but shoveling another multi-billion-dollar payday to Trump’s and the GOP's billionaire backers while screwing over working- and middle-class homeowners and potential homeowners. Every extra dollar you pay on your mortgage is another dollar for Bill Ackman’s next yacht or John Paulson’s next tax shelter. Trump and congressional Republicans are dangling privatization as policy and they're dangling it as payback to the donor class that’s bankrolling the Republican Party’s 2026 midterms. If Democrats can’t explain that to voters in plain English before next year, they’ll be letting Trump run the same scam George W. Bush’s Wall Street pals ran in 2008. This time, though, the crash will be wearing a red MAGA hat.