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Shares of mortgage giants Freddie Mac and Fannie Mae climbed in OTC trading on Tuesday after upbeat remarks from a top housing regulator stirred investor optimism. Freddie Mac gained 2.4 percent, while Fannie Mae added 0.5 percent.
U.S. Federal Housing Finance Agency Director William “Bill” Pulte said in a Fox Business interview that he believes the two companies are worth between 500 and 700 billion dollars today, with the potential to reach a trillion or more in the future. His comments appeared to boost sentiment around the long-debated value of the firms.
Pulte also hinted at a possible initial public offering. He said that if the plan goes forward, the government would likely sell only about 5 percent of its stake. He added that the timing would depend entirely on President Donald Trump, noting, “the President holds all the cards.”
He described a potential IPO as “very oversubscribed” and suggested it could be the largest in history. Pulte also said that earlier talks of selling the firms for 100 to 150 billion dollars would have undervalued them and praised Trump’s decision to keep them intact.
The FHFA director confirmed that the government would continue to hold a stake in the companies even after an offering, estimating it would retain around 5 percent.
Fannie Mae and Freddie Mac have remained under government control since the 2008 financial crisis, and their future has been a recurring topic in U.S. housing policy. Pulte’s bold valuation remarks and IPO hints gave investors a fresh reason to trade the long-watched mortgage stocks.