Freddie Mac: Potential Freedom In 2025, But Multifamily Risks Loom

Summary

• Fannie Mae and Federal Home Loan Mortgage Corporation aka Freddie Mac stand to benefit significantly from Trump's administration as his allies push for quick release from conservatorship.
• If it remains politically and regulatory feasible, the government may sell Fannie Mae and Freddie Mac over the next two years.
• Assuming its net income remains near current levels, accounting for estimated preferred dividends, I estimate FMCC's EPS potential is around $1-$2 if released, giving it immense dividend potential.
• FMCC's discount potential is offset by significant risks from rising multifamily loan delinquencies, which I expect to accelerate with lower rents and higher borrowing costs.
• FMCC has value potential, but its business model may become obsolete with the rise of AI-powered non-GSE loans.

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Federal National Mortgage Association (OTCQB:FNMA) aka Fannie Mae and Federal Home Loan Mortgage Corporation (OTCQB:FMCC) aka Freddie Mac are among the most significant potential benefactors of Donald Trump's incoming administration. In the

Analyst’s Disclosure:I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.