Fannie Mae, Freddie Mac In Upheaval As Trump Administration Considers Privatizing Mortgage Giants

President Donald Trump's newly appointed director of the Federal Housing Finance Agency Bill Pulte on Thursday fired the CEO of mortgage giant Freddie Mac FMCC and placed two senior FHFA officials on administrative leave. 

The Details: Pulte fired Freddie Mac CEO Diana Reid and placed FHFA COO Gina Cross and Human Resources Director Monica Matthews on leave, according to a report from Politico. 

The moves come after Pulte fired 14 members of Fannie Mae FNMA and Freddie Mac's boards of directors and appointed himself chairman of both companies earlier this week. Antonio White, director of FHFA's Office of Congressional Affairs and Communications, was fired on Monday.

The sources also told Politico that several employees in the FHFA's Office of Consumer Protection, the Office of Statistics and Research and the Office of Equal Opportunity and Fairness were placed on leave and employees in the Office of Minority and Women Inclusion were placed on leave weeks ago, as Pulte guts the agency.

Why It Matters: The shake-up at Fannie Mae and Freddie Mac, which underpin about half of the U.S. residential mortgage market, comes as the Trump administration considers privatizing them. Privatization of the government-controlled entities could benefit private investors but has raised concerns among Democrats and others about potential disruptions to the housing finance market

What Else: Billionaire investor and CEO of Pershing Square hedge fund Bill Ackman recommended the companies as investments in December and said he sees the potential for Fannie Mae and Freddie Mac to come out of conservatorship under the Trump administration. 

“Trump likes big deals and this would be the biggest deal in history. I am confident he will get it done,” Ackman wrote in a social media post. 

FNMA, FMCC Price Action: According to data from Benzinga Pro, Fannie Mae shares ended Thursday's session 3.99% higher at $6.26 and Freddie Mac closed up 1.57% at $5.16. Both stocks are moving higher in early in Friday's session, despite large index futures moving lower. 

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