A Republican lawmaker is proposing new legislation to establish a congressional framework for ending the federal conservatorship of Fannie Mae and Freddie Mac, reviving one of housing finance's longest-running policy debates.
U.S. Rep. Scott Fitzgerald, R-Wis., introduced a three-bill housing package on June 25, led by the Sustainable Homeownership Act, which would establish statutory guardrails for the release of the government-sponsored enterprises (GSEs) from conservatorship. Fannie Mae and Freddie Mac have operated under the oversight of the Federal Housing Finance Agency (FHFA) since September 2008, when they were placed into conservatorship during the financial crisis.
Rather than simply calling for the GSEs' release, Fitzgerald's proposal seeks to establish the rules that would govern a post-conservatorship housing finance system. According to the congressman's office, the bill would encourage greater private capital participation, strengthen taxpayer protections, preserve broad lender access to the secondary mortgage market, and limit excessive risk-taking by the enterprises. It would also tie future conforming loan limit increases more closely to household income rather than home-price appreciation and allow certain enterprise funds to be used to support housing supply initiatives.
"Fannie Mae and Freddie Mac have remained in conservatorship since the 2008 financial crisis, and Congress should establish clear guardrails for a more sustainable housing finance system," Fitzgerald said in a statement.
Congress Enters The Conservatorship Debate
While legislation to end conservatorship has surfaced before, the proposal arrives as policymakers have renewed discussions about the long-term future of the GSEs. Since taking office, FHFA Director Bill Pulte has implemented governance changes at Fannie Mae and Freddie Mac while indicating that conservatorship should not continue indefinitely. At the same time, the enterprises have spent years building capital in preparation for a possible eventual release, though many analysts believe additional capital would still be needed before they could safely exit government control.
For mortgage lenders, the significance extends beyond the legislation's chances of becoming law. Although the bills face a lengthy legislative process, they signal that some lawmakers want Congress—not just regulators or the White House—to define how any future release from conservatorship would work.
If enacted, changes to the GSEs' structure could eventually influence areas including guarantee fees, capital requirements, secondary market liquidity, and the amount of private capital required to absorb mortgage credit risk. However, the legislation does not propose eliminating the 30-year fixed-rate mortgage or fundamentally changing the GSEs' role in supporting mortgage liquidity.
Changes to conforming loan limit calculations could also have long-term implications for lenders operating in high-cost housing markets, where annual increases have expanded the size of loans eligible for purchase by Fannie Mae and Freddie Mac.
What It Could Mean
In addition to the conservatorship proposal, Fitzgerald introduced the Working Families Home Construction Act, which would allow Fannie Mae and Freddie Mac to purchase certain residential construction loans, subject to home-price limits. The legislation is modeled after a pilot program in Washington County, Wisconsin, that Fitzgerald said successfully expanded financing options for middle-income housing developments.
Fitzgerald said the measure is designed to reduce financing costs for builders constructing middle-income housing and encourage additional housing supply.
The third bill, the Home Affordability Through Mortgage Simplification Act, would simplify portions of the Truth in Lending Act and Real Estate Settlement Procedures Act Integrated Disclosure (TRID) framework by providing relief for certain technical disclosure errors that do not materially harm consumers but can create compliance burdens and delay closings.
Together, the three bills reflect a broader effort to address housing affordability from multiple angles: reshaping the long-term structure of the housing finance system, increasing housing production, and reducing regulatory friction for lenders.
The legislation now heads to committee, where it would require hearings and approval before it can advance further in Congress. Similar proposals to end conservatorship have historically struggled to gain sufficient bipartisan support, making the immediate likelihood of enactment uncertain.
Still, the package underscores that the debate over Fannie Mae and Freddie Mac is evolving. The question is no longer simply whether the enterprises should eventually leave conservatorship, but increasingly what the rules should look like when they do.
The proposals arrive as affordability remains a top concern across the housing market, with policymakers debating how to increase housing supply, reduce financing costs, and preserve access to mortgage credit without exposing taxpayers to future bailouts.
It would also tie future conforming loan limit increases more closely to household income rather than home-price appreciation and allow certain enterprise funds to be used to support housing supply initiatives.
