‘The Big Money Show’ panel discusses federal housing official Bill Pulte raising the idea of ”portable mortgages” to boost home sales and revive the declining housing market.
Billionaire investor Bill Ackman unveiled a plan Tuesday that he said would help the Trump administration achieve its goals for Fannie Mae and Freddie Mac, the two giants mortgage companies that remain under government control since the 2008 financial crisis.
Fannie Mae (Federal National Mortgage Association) and Freddie Mac (Federal Home Loan Mortgage Corporation) are government-sponsored enterprises that form the core of the U.S. housing finance system.
Bill Ackman, CEO of Pershing Square Capital Management, unveiled a three-part plan to address the Trump administration’s concerns about housing affordability. (Patrick Fallon/Bloomberg/Getty Images)
Instead of making home loans directly to borrowers, they buy mortgages from banks and lenders, bundle them into securities and guarantee those securities for investors. This process provides lenders with stable money to make new loans, keeping mortgage loans flowing and rates relatively stable across the country.
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The duo now owns roughly half of all U.S. residential mortgages, amounting to about $12 trillion in outstanding debt.
Ackman’s hedge fund, Pershing Square Capital Management, is it largest common shareholder in Fannie Mae and Freddie Mac, which together own more than 210 million shares.
During a presentation about X, Ackman proposed the following three-step plan:
1. Recognize that the bailout has been repaid
Fannie Mae offices in Reston, Virginia. (Al Drago/Bloomberg/Getty Images)
Fannie and Freddie sent hundreds of billions of dollars in profits to the U.S. Treasury Department, far more than the amount they received in the 2008 bailout.
Ackman said the Treasury Department and the Federal Housing Finance Agency (FHFA) should formally acknowledge that the companies have repaid their debts to taxpayers.
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2. Make taxpayers official owners
As part of the bailout, the government received warrants, or the right to buy up to 79.9% of each company’s shares at a nominal price.
By exercising these rights, taxpayers would become the official majority shareholders of both companies.
3. Bring the companies back to the stock market
Fannie and Freddie were delisted from the New York Stock Exchange after being placed under federal receivership during the 2008 financial crisis.
Ackman argued that they now meet the requirements to be relisted, which would allow investors to trade their shares again.
The head of Pershing Capital said all these steps can be taken immediately by the Treasury Department and the FHFA. He also says this solution would result in taxpayers owning a 79.9% stake in Fannie Mae and Freddie Mac, resulting in a value of more than $300 billion.
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Ackman’s announcement comes as the Trump administration is exploring new ways to make housing more affordable, including a proposed 50-year mortgage, even as critics warn such measures could saddle borrowers with more long-term debt.
Whether either effort gains momentum could determine how the next phase plays out American housing policy balances affordability, risk and taxpayer exposure.
