Article Summary –
Republicans, with former President Donald Trump’s potential 2025 return, are advocating for ending federal conservatorship of Fannie Mae and Freddie Mac, which could raise mortgage costs for new homebuyers by $1,800 to $2,800 annually. Fannie Mae and Freddie Mac, placed under conservatorship during the 2008 financial crisis, were intended to stabilize the housing finance market, but there’s a push to privatize them to reduce taxpayer reliance and foster a robust private mortgage market. Despite Trump’s earlier disavowal of Project 2025, he has since appointed its contributors to key positions, and a bill has been introduced to end federal control over the mortgage giants.
With Republicans controlling the U.S. Senate and House and former President Trump expected to return to the White House in 2025, there is a strong push to end federal conservatorship of major mortgage firms. This change could boost mortgage costs by $1,800 to $2,800 annually for new home buyers, as noted by a financial analyst.
Moody’s Analytics chief economist, Mark Zandi, mentioned to CNN that riskier borrowers may face higher charges, a cost currently mitigated by government backing.
Fannie Mae and Freddie Mac, both federally sponsored entities, buy mortgage debt from banks and bundle them for investors. They were put under federal conservatorship during the 2008 financial crisis by the Treasury Department, now managed by the Federal Housing Finance Agency.
In 2019, Trump’s administration aimed to privatize these companies, a move that could raise annual mortgage costs by about $1,200, based on a 2015 analysis. Zandi has updated this figure considering recent rates and home values.
Trump, unable to execute the plan before leaving office, expressed in a November 2021 letter to Sen. Rand Paul (R-KY) frustration over legal challenges and time constraints, lamenting his inability to release the companies from conservatorship.
Rep. Andy Ogles (R-TN) proposed legislation in September 2023 to end federal control over Fannie Mae and Freddie Mac, directing the Treasury to divest its stake.
The Heritage Foundation’s Project 2025 blueprint supports this initiative, suggesting ending conservatorships to create a sustainable private mortgage market without taxpayer guarantees.
During the 2024 campaign, Trump frequently distanced himself from Project 2025. However, after his election victory, he appointed several contributors to key roles.
A February 2024 report by GO Banking Rates reveals that a Michigan home’s average yearly mortgage cost is $17,465. A $2,800 increase represents a 16% rise.
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