Fannie Mae, Freddie Mac Plunge Over 30% as Privatization Hopes Fade

Edgen Stock

·Mar 20 2026, 02:59

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Key Takeaways

Shares of government-sponsored mortgage giants Fannie Mae and Freddie Mac collapsed by more than 30% in a single week. Investor confidence evaporated as rising mortgage rates, political caution ahead of midterm elections, and broader market instability rendered a near-term government share offering highly improbable.

Stock Collapse: Fannie Mae and Freddie Mac shares plummeted over 30% in one week, with Fannie's stock falling 16% on Thursday to $3.89 and shares now down over 75% from their 52-week highs.
Privatization Delayed: A sharp 0.37 percentage point jump in 30-year mortgage rates to 6.36% and political reluctance ahead of midterm elections have effectively stalled Trump administration plans to take the companies public.
Systemic Risk: With the U.S. government holding warrants for nearly 80% of the companies' common shares since the 2008 bailout, any restructuring carries significant risk to the mortgage-backed securities market, discouraging action during volatile periods.

Shares Plunge Over 30% as Privatization Timeline Shifts

Investors in Fannie Mae and Freddie Mac endured a brutal week as shares of the mortgage-finance giants collapsed by more than 30% since last Friday's close. The sell-off accelerated on Thursday, with Fannie Mae's stock plummeting 16% to $3.89 and Freddie Mac's falling 12.3% to $3.56. This rout erases the significant gains made since President Trump's election, pushing the stocks more than 75% below their 52-week highs from September. The decline reflects a sharp reversal in market sentiment, as hopes for a quick release from government control through a share offering have all but disappeared.

Mortgage Rates at 6.36% Stall Housing Reform

The administration's plans to privatize the government-sponsored enterprises (GSEs) are buckling under macroeconomic and political pressure. A key factor is the sharp increase in borrowing costs; the 30-year mortgage rate jumped 0.37 percentage points to 6.36%, according to Mortgage News Daily. This rate spike, combined with broader market instability fueled by geopolitical conflict and soaring oil prices, creates a high-risk environment for tinkering with the U.S. housing finance system. With midterm elections approaching, the White House appears unwilling to risk destabilizing the mortgage market. The political appetite for reform has waned, with Senate Banking Committee Chairman Tim Scott stating he doesn't expect any move to take the companies out of government control until after the elections.

Government's 80% Stake Complicates Any Future Exit

Underlying the immediate market turmoil is a complex structural challenge that has persisted since 2008. The U.S. government took control of Fannie and Freddie during the financial crisis, receiving warrants to acquire nearly 80% of their common stock in exchange for a massive bailout. This controlling stake means the government has ultimate power over the companies' fate, but it also means any share sale or restructuring could wipe out existing shareholders and disrupt the vital market for mortgage-backed securities. Even if the political and economic climate improves after the midterms, fundamental disagreements remain among stakeholders on issues like capital requirements, making any path to privatization exceptionally difficult.