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Fannie Mae (FNMA) and Freddie Mac (FMCC) just skyrocketedjumping 16.6% and 16.3%, respectively, as of 1.20pm todayafter HUD Secretary Scott Turner confirmed that privatization is back on the table. Investors have been piling in since the election, sending shares up over 400% as anticipation builds around the long-delayed effort to free the mortgage giants from government control. Turner, backed by the Treasury and Congress, says he's playing quarterback on the deal, setting the stage for what could be one of the biggest financial shake-ups in years.
The privatization play is also tied to broader government reforms, with Elon Musk's Department of Government Efficiency eyeing proceeds to help fund Trump's tax cuts. One proposal being floated suggests a valuation of over $330 billion post-privatization, with $250 billion coming from Treasury-held warrants converting to common shares. If this goes through, it could be one of the biggest financial windfalls in recent history. But there's a riskanalysts warn that a botched execution could spook mortgage-backed security investors, potentially driving mortgage rates higher and cooling off the red-hot housing market.
Beyond Fannie and Freddie, Turner is leading a full-scale overhaul at HUDslashing regulations, pushing for more development on federal lands, and cutting bureaucratic red tape. It's a high-stakes bet with massive implications for the housing sector and financial markets. Investors are watching closely to see whether this long-stalled privatization plan finally gets over the finish lineor if it fizzles out like previous attempts.
This article first appeared on GuruFocus.