Fannie Mae (OTCQB:FNMA -1.1%) and Freddie Mac (OTCQB:FMCC -0.3%) would need to build ~$200B-$250B in capital reserves and would need several years of an “established earnings history” before the government-controlled mortgage giants launch initial public offerings, writes Raymond James analyst Ed Mills in a note.
He estimates that any IPO would be at least three to four years away.
A number of other issues that would need to be resolved: the qualified mortgage “patch”, the future of the government-sponsored enterprises’ multifamily businesses, potential changes to underwriting standards, how the new uniform mortgage-backed security fares, and “how any implicit or explicit government backing would work.”
Add onto that list potential friction from the 2020 elections if Democrats win the White House and make gains in Congress.
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