Trump’s $200B Fannie Mae Order: MBS Purchases, Rates, and Risks

In January 2026, President Donald Trump’s $200 billion Fannie Mae order instructed Fannie Mae and Freddie Mac to purchase up to that amount in mortgage-backed securities, using the two government-controlled mortgage giants to try to push mortgage rates down for American homebuyers.¹ Rates dipped in the weeks that followed, refinance applications jumped, and a long-running debate over privatizing the two companies reignited alongside sharp questions about who really benefits.

What Trump Actually Ordered

Trump announced the directive on Truth Social on January 8, 2026, writing that he was “instructing my ‘Representatives'” to purchase $200 billion in mortgage bonds. He claimed the companies are “flush with cash” and hold “$200 BILLION DOLLARS IN CASH” for the effort, with the goal of driving “Mortgage Rates DOWN, monthly payments DOWN, and make the cost of owning a home more affordable.”¹²

Bill Pulte, director of the Federal Housing Finance Agency, confirmed the order the same day on X: “We are on it. Thanks to President Trump, Fannie and Freddie will be executing.”¹ Trump repeated the pledge at the World Economic Forum on January 21.³

The president did not identify a legal mechanism, a timeline, or which entity would execute the trades. The Federal Reserve, which had been winding down its own mortgage bond holdings since 2022, cannot be ordered to buy by the executive branch. Instead, the administration relied on its control of Fannie Mae and Freddie Mac through the FHFA’s conservatorship powers to carry out the purchases directly.¹

Both companies have been under federal conservatorship since September 2008, when the FHFA took control after the housing crisis. Together, they support roughly 70% of the U.S. mortgage market and guarantee $6.6 trillion in mortgage-backed securities, about half of all outstanding U.S. mortgage debt.⁴⁵

How the Purchases Are Being Carried Out

Buying started almost immediately. In January, the two companies added a combined $12.5 billion in agency mortgage-backed securities to their retained portfolios, with Fannie Mae accounting for $8.5 billion and Freddie Mac for $4 billion.³ The pace accelerated after that.

By the end of April 2026, Fannie Mae alone had purchased $115.9 billion in mortgage-related assets year-to-date, taking its retained mortgage portfolio to $174.8 billion.⁶ Freddie Mac’s mortgage-related investments portfolio stood at $141.8 billion as of April 30, or $163.3 billion under the terms of its agreement with the Treasury.⁷ Both were approaching, but had not yet reached, the individual $225 billion portfolio caps set in their senior preferred stock purchase agreements with Treasury.³

BTIG analyst Eric Hagen projected a sustained pace of roughly $5 billion to $8 billion per month per company over nine to twelve months.³

What Happened to Mortgage Rates

Rates moved, though not by much. Thirty-year fixed mortgage rates fell nearly 0.2 percentage points the day after the directive, closing at 5.99%.⁸ By early March, the average rate stood at 5.95%, down from 6.20% before the announcement.³

Hagen attributed the drop to three factors: lower benchmark 10-year Treasury yields (about 15 basis points), tighter spreads between mortgage-backed securities and Treasuries (5 to 10 basis points), and slightly reduced profit margins among mortgage lenders. Spreads between agency MBS and Treasury notes narrowed to roughly 105 basis points, down from 115 before the announcement and about 140 at the end of summer 2025.³

Others said the effect was modest at best. A week after the announcement, Chris Duncan of La Salle State Bank told Marketplace that 30-year rates at his institution had fallen by only an eighth of a percentage point, while 10-year rates had actually risen. Mike Fratantoni, chief economist at the Mortgage Bankers Association, said the effect “might not be enough to move the needle for borrowers” because government debt levels and inflation risks were pushing long-term rates the other way.⁹ The Cato Institute estimated the full $200 billion in purchases would reduce mortgage rates by only about 6 basis points, while also boosting housing demand and potentially pushing home prices higher.¹⁰

One reaction was unambiguous. Refinance applications jumped 40% in the week after the announcement, according to the Mortgage Bankers Association.⁹

Why Critics Are Worried

The Cato Institute characterized the directive as “mission creep” that effectively turned Fannie and Freddie into an alternative monetary authority, bypassing the Federal Reserve’s decisions on interest rates and asset purchases.¹⁰

Fannie and Freddie already bear credit risk through the mortgages they guarantee. The new bond purchases layer significant interest-rate risk on top: if rates rise, the value of the newly acquired securities falls, potentially requiring additional Treasury support for the already undercapitalized companies. Taxpayers are on the hook for that support.¹⁰

The National Association of Realtors welcomed the downward rate pressure but cautioned that it “must be accompanied by efforts to expand supply” to meaningfully improve affordability.⁸

How the Order Ties Into Privatization

Alongside the bond-buying directive, the administration has been trying to take Fannie and Freddie public. In August 2025, Trump met with the CEOs of JPMorgan, Goldman Sachs, and Bank of America about a potential IPO.¹¹ Treasury Secretary Scott Bessent suggested that selling a 3% to 6% stake could raise about $30 billion.¹² In November 2025, Pulte said the government was exploring selling up to 5% of shares while potentially keeping the companies in conservatorship.¹³ Trump posted on Truth Social in May 2026 that the “U.S. Government will keep its implicit GUARANTEES” following any offering.

The bond-buying order complicates that plan. Using the companies’ cash to buy mortgage bonds leaves them with less capital available for the recapitalization needed to exit government control, and the purchases introduce uncertainty about the timeline for any offering.³

The Capital Gap

The two companies had a combined net worth of roughly $179 billion in the first quarter of 2026.¹⁴ The FHFA’s capital framework requires far more. Fannie Mae’s first-quarter disclosure showed deficits across every risk-based and leverage measure, including a $37 billion shortfall on common equity tier 1 capital against a total requirement of $142 billion with buffers.¹⁵ Full risk-based capitalization for both companies is estimated at $328 billion, roughly double their current combined equity.

Structural questions remain unresolved. Treasury holds a $341 billion liquidation preference on its senior preferred stock and warrants for 79.9% of each company’s common equity, with the warrants set to expire in 2028.¹⁶ Whether that debt would be forgiven, converted to common equity, or restructured has not been decided. Without an answer, economists have said, investors cannot accurately value the companies.¹²

Who Stands to Gain

Senator Elizabeth Warren said she is “very worried that the Trump administration is very focused on how the billionaires are gonna do in any Fannie/Freddie deal” rather than on “the young family that’s hoping to buy their first home.”¹²

Bill Ackman’s Pershing Square Capital Management is the largest common shareholder in both companies, holding a combined total of more than 210 million shares accumulated over more than a decade.¹⁷ In December 2025, Ackman called the companies’ common stock his “best idea for 2026.”¹¹ John Paulson, another billionaire hedge fund manager and Trump donor, has disclosed preferred stock positions, though the size of his holdings is unknown.¹² Billionaire Carl Icahn has also disclosed a stake without specifying its current size.¹⁸ Public Citizen asked inspectors general to investigate potential insider trading in the companies’ shares amid the administration’s shifting signals.¹⁹

These investors purchased shares at deeply depressed prices after the 2008 conservatorship. According to NPR, the administration “could dictate the terms” of how much profit shareholders realize in any privatization, ranging from “a pittance” to “a massive profit.”¹²

Risks to Homebuyers

A poorly managed exit from conservatorship could hurt the buyers the administration says it wants to help. Without an explicit government guarantee on the companies’ mortgage-backed securities, mortgage rates could rise by 0.2 to 0.8 percentage points, costing a typical homebuyer $500 to $2,000 more per year.⁴ Susan Wachter of the Wharton School described ending the conservatorship as “operationally and politically difficult” and warned it could disrupt the broader market for mortgage-backed securities.¹¹

Where Things Stand Now

By mid-2026, the privatization effort had largely stalled. A major factor was Pulte’s appointment as acting director of national intelligence, scheduled to begin June 30, 2026.¹³ Analyst Jaret Seiberg of TD Cowen said the dual role would prevent Pulte from dedicating the attention needed to unwind an 18-year-old conservatorship.¹¹ Lawmakers introduced an amendment to block Pulte from leading both agencies at once.

On June 5, 2026, Trump told reporters aboard Air Force One that an IPO remained “on the table” but stressed, “It’s not a rush.”¹³ Barron’s reported days later that the president’s interest in a public offering “has waned,” and both companies received analyst downgrades.²⁰ Shares of Fannie Mae and Freddie Mac had fallen about 40% year-to-date by early June, with further declines after Pulte’s intelligence appointment was announced.¹¹

The bond purchases themselves continue. Congress has been unable to reach consensus on broader reform for more than a decade, no privatization legislation has gained traction, and the White House, FHFA, Fannie Mae, and Freddie Mac all declined to provide an updated timeline.¹¹

1
CNBC. Trump Mortgage Bonds Rates Fannie Freddie
2
CNN. Mortgage Bonds Trump Purchase Rates
3
HousingWire. GSE MBS Purchases January 2026
4
Real Estate Research Corporation. Fannie Mae, Freddie Mac, and the Future of Housing
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Fannie Mae. Monthly Volume Summary, April 2026
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Freddie Mac. Monthly Volume Summary, April 2026
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National Association of REALTORS. President Trump Directs MBS Purchases to Lower Mortgage Rates
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Cato Institute. When Housing Policy Becomes Monetary Policy
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CNN. Fannie Mae Freddie Mac Trump
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Taylor & Francis Online. GSE Conservatorship Financial Analysis
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CNN. Fannie Mae and Freddie Mac Private
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