The David Greene Show – Episode 100

Mortgage Monday | Fannie and Freddie Potential Decoupling

Date: November 24, 2025
Host: David Greene
Guest: Christian Bachelder

Episode Overview

In this “Mortgage Monday” installment, David Greene is joined by Christian Bachelder to discuss the potentially seismic shift in American housing finance: the possible privatization (via IPO) of Fannie Mae and Freddie Mac. They break down what these institutions are, why their structure matters, and forecast the ramifications—both positive and negative—should these government-sponsored enterprises (GSEs) become private, for-profit businesses.

Key Discussion Points & Insights

1. What Are Fannie Mae and Freddie Mac—and Why Do They Matter?

• Definition and Role:
  GSEs that set rules for conforming loans—primarily conventional mortgages.
  • Christian: “They’re basically the rule centers…They set the guidelines…if X criteria are met, we will insure this product…as an investment tool for an investor.” [00:56]
• Impact on Consumers:
  These entities enable Americans to get affordable, long-term, low-down-payment mortgages rarely available elsewhere globally.
  • Christian: “America is one of the very few places…you can put 5% down and buy a home and get something financed in the single digit interest rates.” [02:21]
• Subsidization and Standardization:
  The U.S. housing market is uniquely structured with government-backed guarantees and artificially suppressed rates, making homeownership possible for the masses.
  • David: “These are not market rates…We subsidize rates and we keep them artificially low.” [04:36]

2. History and Evolution of GSE Oversight

• Pre-2008 Era:
  Lax standards, minimal enforcement, rampant fraud, and dangerously loose lending led to the financial crisis.
  • Christian: “Prior to 2008…Somebody would go to their Xerox machine and they would add a couple zeros to the back of your income…and all of a sudden your borrower qualified for whatever the hell he wants.” [08:07]
• Why Fannie & Freddie Came Under Federal Control:
  The 2008 crisis exposed the need for standardized rules and enforcement. GSEs took the role of not just creating the rules but policing them.
  • Christian: “They were paid to put up the signs (rules) but also paid to be the police managing that they were being followed.” [11:10]

3. What Does Privatization Mean? (Discussion of the Potential IPO)

• IPO Rumblings and Political Context:
  Under President Trump’s administration, there’s renewed talk of releasing Fannie and Freddie to the public markets as early as late 2025 or early 2026.
  • David (quoting Pulte): “We are focused on running them like a business and taking out costs…I don’t think there’s any limit to what they could be worth one day.” [05:41]
  • Christian: “If it went private, first and foremost, they would become a for-profit business…that means rates go up.” [15:41]
• Industry Response and Apprehensions:
  The Mortgage Bankers Association stresses any change must be “informed, careful and calibrated” to avoid disrupting the mortgage market. [14:50–15:20]
• Potential Risks:
  • Loss of standardization
  • Higher rates due to the drive for profits
  • Return of predatory, subprime products and looser underwriting
  • Increased importance of trustworthy mortgage professionals

4. Speculating on Consequences If Privatization Happens

• Higher Rates, Profit Motive:
  For-profit GSEs would demand higher returns; mortgage costs likely rise.
  • Christian: “When individuals with profit in mind run the mortgage company, bad things happen. You have 2008 happen.” [17:00]
• Potential for Regulatory Lapses:
  History shows that privatization and profit motives encourage relaxed guidelines, riskier products, and eventually, market instability.
• Loss of Consumer Protection:
  Enforcement of ethical lending may fall to individuals instead of systemic oversight, making consumers more vulnerable.
  • David: “If Fannie Mae is not going to require integrity, like who’s going to uphold it? …the bad answer is we’re going to have a bunch of bad brokers.” [21:55]
• Need for Savvy Mortgage Brokers:
  Navigating a fragmented, less-regulated marketplace will require expert guidance.
  • David: “If I end up being right about my picture here…would you agree that the right mortgage broker becomes even more important?” [21:28]

5. Memorable Quotes & Notable Moments

• On the Uniqueness of the U.S. Mortgage System:
  • David: “Other countries don’t have 30-year fixed rates. Nobody lends out their money for 30 years at a 3% rate…We do it a little bit differently in America and it’s really good for the homebuyers…” [04:36]
• On Deregulation Dangers:
  • Christian: “We saw pretty easily what happens…putting whatever percentage they want to down led to the great financial crash of 2008.” [03:58]
• On Risks of Profit-Driven Lending:
  • David: “This is how the banks screwed America over…we married the government to the lending world to stop that…” [20:06]
• On Consumer Vulnerability:
  • David: “You get China when you do that because it all goes into chaos and then the government steps in…now you get a communistic country…” [22:51]
• On the Role of Individual Brokers:
  • Christian: “…So much of that responsibility for upholding the integrity is going to fall on the individuals…and not the overall structure. I think that’s dangerous.” [22:05]

6. Advice and Final Thoughts

• Both urge listeners to appreciate the current system's protections, warning against complacency about government guarantees.
• Christian emphasizes the weight that would fall on individual mortgage professionals if centralized rules disappeared.
• David uses an analogy: “Dance with the one that brought you,” encouraging gratitude for the status quo.

Timestamps for Key Segments

• GSE Basics & Their Benefits: 00:56 – 03:40
• US System vs Other Countries: 04:36 – 05:41
• History Pre/Post 2008: 08:07 – 12:28
• IPO Headlines & Industry Response: 05:41 – 15:20
• Risks, Scenarios, and Market Speculation: 15:41 – 22:38
• Closing Wisdom & Takeaways: 22:46 – End

Summary Table: Consequences of Fannie & Freddie Privatization

| Scenario | Possible Outcomes | |---------------------------|----------------------------------------------------------| | Privatization (IPO, For-Profit) | Higher rates, riskier lending, fewer consumer protections, possible return of predatory practices | | Continued Government Oversight | Lower rates, standardized products, greater consumer safety, less market risk |

Conclusion

This episode delivers a thorough, candid look at a pivotal moment in US housing finance. David and Christian balance historical context with forward-looking analysis, warning that although the American mortgage landscape seems stable today, the potential privatization of Fannie and Freddie could upend the industry and profoundly impact consumers. Their message: Stay informed, be grateful for current standards, and, if change comes, seek out trustworthy advisors.

Contact Info:

• Christian: the1brokerage.com | Instagram: @the1broker
• David: davidgreen24.com | Instagram: @DavidGreen24

End of summary