By Shaina Mishkin
Fannie Mae and Freddie Mac are boosting efficiency and building capital, but there's still no sign of political movement toward a future outside of government conservatorship, two analysts wrote Friday.
Both Fannie Mae and Freddie Mac, the two secondary mortgage market giants that buy, securitize, and guarantee mortgage loans, are "making favorable progress at improving efficiency and building capital," Wedbush analysts Michael Piccolo and Henry Coffey wrote.
But "the political momentum towards an IPO or recap & release has arguably stalled, in our view, until after the midterms," they wrote.
Investors are waiting on signs that the companies will move to exit government conservatorship, but indications of those plans have been few and far between in 2026. Fannie Mae and Freddie Mac shares are down 23% and 29%, respectively, this year, according to Dow Jones Market Data.
At a recent $8.18, Fannie Mae shares have surpassed the Wedbush analysts' price target of $8, which is based on a blended analysis of potential outcomes surrounding the future of the companies' conservatorship. The analysts downgraded Fannie Mae to Neutral based on its valuation, while maintaining Freddie Mac's Outperform rating with a 12-month $12 price target.
Fannie Mae's $4.66 billion in pretax income fell short of the analysts' expectations, which called for $4.8 billion, while Freddie Mac's pretax income of $4.4 billion beat their expectations of $3.6 billion, Piccolo and Coffey wrote.
Freddie Mac's $73.9 billion in net worth "represents an +18% YoY increase and a milestone in the recapitalization story," they wrote. "At the current annualized earnings run rate of $14B, the company is building capital faster than at any point since conservatorship began in Sept'08."
Still, news on the companies' long-running government conservatorship is scarce. In response to a request for comment on the note, a Federal Housing Finance Agency spokesperson pointed Barron's to comments from FHFA director Bill Pulte in Fannie Mae's earnings release.
"Fannie Mae is a far more effective and leaner company than it was a year ago, with solid earnings, lower expenses, and $112.7 billion in net worth," Pulte said. "A financially sound and dependable Fannie Mae is essential to the long-term health of the housing and mortgage markets."
Fannie Mae and Freddie Mac did not immediately respond to a request for comment.
"Again there was no mention or news on IPO plans or recap & release," the analysts wrote.
Write to Shaina Mishkin at shaina.mishkin@dowjones.com
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(END) Dow Jones Newswires
May 01, 2026 11:42 ET (15:42 GMT)
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