The post didn’t provide any other details, nor did the official White House news page have any mention of the IPO at the time of this writing.
According to the WSJ, the Trump administration believes the IPO could raise roughly $30 billion from the initial stock offering and that some government officials are valuing the GSEs at a combined $500 billion or more. Trump’s image seems to suggest the IPO would be offered under one company, the Great American Mortgage Corporation.
Analysts on Friday were skeptical that such a huge undertaking could be finished by the end of the year.
Bose George, an analyst at Keefe, Bruyette & Woods (KBW) said: “I feel like getting it all done before the end of the year seems very difficult. They need to figure out capital levels. Once the process gets started, it will be clear that it’s not doable in four months. If there’s a real sense of urgency, it can be done some point next summer.”
Wells Fargo analysts Mario Ichaso and Jonathan Carroll wrote in a report on Friday: “We now place the odds of release at 40% as fundamental challenges remain and execution risk is elevated.”
When it comes to the IPO, the highest priority to those in the mortgage industry is that the new company still has a government guarantee of some kind, which provides safety for the mortgage market and keeps rates down. In May, Trump posted about a possible IPO, writing: “I am working on TAKING THESE AMAZING COMPANIES PUBLIC, but I want to be clear, the U.S. Government will keep its implicit GUARANTEES, and I will stay strong in my position on overseeing them as President.”
HousingWire Lead Analyst Logan Mohtashami, who has talked extensively about Trump’s plans for the GSEs on the HousingWire Daily podcast, said on Saturday that the Trump administration’s focus on lowering mortgage rates would seem to guide their decisions on any IPO.
“The most important thing about an IPO of Fannie and Freddie is that the administration provides some type of government support to the companies so pricing doesn’t get hit. The Trump administration has said often that they won’t do this if they believe it would cause mortgage rates to rise,” Mohtashami said.
Mohtashami also remains skeptical of the intent behind Trump’s social posts. “I believe these kinds of posts are always test balloons to see how the public or the market responds. While specific details have not yet been released, it is reasonable to anticipate that a clear plan for release is in development. In the meantime, wait until more information is released.”
