Let me be upfront
I am not a financial advisor. I do not have a price target. I have been wrong about the timeline for this trade for over 12 years. What you're getting here is the honest framework I actually use to think about Fannie Mae — not a forecast you can screenshot and blame me for later. I own 26 series of junior preferred and have had my net worth on the line since 2014. I am biased. I am transparent about that bias. Proceed accordingly.
What Actually Drives FNMA Stock Price
If you came here looking for a technical analysis chart with support levels and resistance zones, I'm going to disappoint you. FNMA doesn't trade on technicals. It doesn't trade on earnings. It barely trades on fundamentals in any traditional sense.
FNMA trades on one thing: administrative and political decisions.
Fannie Mae has been in government conservatorship since September 2008 — over 17 years. During that time, it's been consistently profitable (since 2012), has paid Treasury over $300 billion in dividends (far more than the ~$190B it drew during the financial crisis), and has retained significant capital under amended PSPA terms.
None of that matters for the stock price until the people in charge — Treasury, FHFA, and the White House — decide what to do with the conservatorship. That's it. That's the whole thesis. Everything else is noise.
Treasury / FHFA Action
PSPA amendments, capital rule changes, conservatorship exit framework. This is 90% of the stock price.
Political Timeline
Which administration is in power, what their housing finance priorities are, and how much political capital they'll spend.
Legal Outcomes
Collins v. Yellen remand, takings claims, Net Worth Sweep challenges. Favorable rulings strengthen negotiating position.
The Catalysts That Actually Matter
Instead of staring at candlestick charts, here's what I actually monitor. I track these in detail on my GSE Catalyst Tracker, but here's the summary for FNMA specifically:
PSPA Amendment
The #1 CatalystTreasury and FHFA must amend the Senior Preferred Stock Purchase Agreements. How the ~$190B senior preferred is handled — written down, converted, or retired — determines everything for common and preferred shareholders alike.
Capital Rule Revisions (ERCF)
In ProgressThe Enterprise Regulatory Capital Framework sets how much capital Fannie needs before exit. Current rules require ~$180B for Fannie alone. Any reduction narrows the gap between retained earnings and freedom.
IPO / Secondary Offering Structure
Planning PhaseThe offering structure determines dilution. A massive common stock offering at low prices = bad for FNMA holders. A moderate offering with warrants or preferred conversion = less painful.
Executive Order Implementation
ActiveTrump's March 2026 EO directed agencies to reduce mortgage lending regulatory burdens. The follow-through on this EO signals how serious the administration is about the timeline.
Court Rulings (Collins Remand, Takings)
OngoingFavorable legal outcomes strengthen shareholders' bargaining position. Unfavorable ones weaken it. Either way, the political path matters more than the legal one at this point.
Congressional Activity
BackgroundLegislation isn't required for administrative recap and release, but Congressional support (or opposition) affects political calculus and long-term housing finance reform.
Pro Forma Restructuring Math
This is the back-of-napkin math I walk through in my Seeking Alpha article. It's not a price prediction — it's a framework for thinking about what different outcomes look like for common vs. preferred shareholders.
The core question: How does Treasury retire or convert its ~$190B senior preferred stock, and what does that mean for dilution?
Scenario Analysis: Common Stock Dilution
Fannie Mae normalized earnings ~$20B/year • 12x P/E multiple • ~$190B senior preferred
| Scenario | SPSPA Treatment | New Shares Issued | Implied Value/Share |
|---|---|---|---|
| Best Case | Senior preferred written down / retired at cost | Minimal (secondary only) | $30-50+ |
| Base Case | Convert $190B at market price (~$7) | ~27B new shares | $7-12 |
| Worst Case | Convert $190B at discount (~$3-4) | ~50-60B new shares | $2-5 |
Important: These are illustrative scenarios, not predictions. The actual terms will be negotiated between Treasury and FHFA. Current common shares outstanding: ~1.16B. At 12x earnings on ~$20B = ~$240B enterprise value. The math changes dramatically depending on conversion price.
Why preferred shareholders care less about this math
Junior preferred shares (FNMAS, FNMAJ, FMCKJ, etc.) have a fixed par value of $25/share plus accumulated unpaid dividends. Regardless of how many common shares get issued, preferred has structural priority. The only scenario where preferred gets hurt is outright cancellation — which would make a capital raise impossible. This is the core reason I own preferred instead of common. Full preferred stock guide →
Why I Own Preferred Over Common
People ask me constantly: "Why FNMAS over FNMA?" The short answer is structural protection with a defined upside.
I wrote about this extensively in my Seeking Alpha article about the secondary offering being huge for FNMAS. The key insight: a secondary offering or IPO dilutes common shareholders but actually validates preferred shareholders, because you can't sell new equity to institutional investors if you've wiped out the existing capital stack.
Preferred Advantages
- +Fixed $25 par value — defined upside, less guesswork
- +Accumulated unpaid dividends owed (~$10-15/share on some series)
- +Priority over common in liquidation and restructuring
- +IPO/offering validates preferred; dilutes common
- +26 different series = diversification within the trade
Common Risks
- –$190B senior preferred conversion = massive dilution
- –No par value, no floor — could go to pennies in bad scenario
- –Government warrants (79.9%) add another layer of dilution
- –IPO/offering dilutes common to raise capital
- –Upside is theoretically unlimited but depends entirely on terms
Key People to Watch
FNMA's price is downstream of decisions made by a handful of people. Here's who they are and what they've said publicly:
Bill Pulte
FHFA Director
As FHFA director, Pulte oversees Fannie Mae and Freddie Mac directly. He has tweeted about privatization and engaged directly with shareholders on social media — unprecedented for an FHFA director.
“Has publicly discussed ending the conservatorship and returning Fannie and Freddie to private hands.”
Scott Bessent
Treasury Secretary
Treasury holds the senior preferred stock (~$190B liquidation preference for Fannie alone). Any restructuring requires Treasury's involvement. Bessent understands capital markets and has discussed recapitalization frameworks.
“Discussed GSE recapitalization in Senate confirmation hearings. Most favorable Treasury Secretary for shareholders in over a decade.”
Howard Lutnick
Commerce Secretary
Has publicly advocated for privatizing Fannie and Freddie. Met with NEC Director Hassett on the same day Trump signed the mortgage credit executive order in March 2026.
“Called for "the largest IPO in history" for Fannie Mae and Freddie Mac.”
Kevin Hassett
NEC Director
As head of the National Economic Council, Hassett coordinates economic policy across agencies. His involvement signals this is a White House priority, not just an FHFA or Treasury initiative.
“Coordinated with Lutnick on housing finance reform. NEC involvement signals top-level prioritization.”
What's Been Said About When
Take every timeline estimate — including mine — with a mountain of salt. I've been saying “this year or next” since approximately 2015.
That said, here's what's actually happened and what's expected:
Bessent Confirmed
Scott Bessent confirmed as Treasury Secretary. Most favorable Treasury appointment for GSE shareholders since conservatorship began.
Pulte Appointed FHFA Director
Bill Pulte installed as FHFA Director. Immediately began engaging shareholders on social media about privatization path.
Executive Order on Mortgage Credit
Trump signed EO directing FHFA and other agencies to reduce regulatory burdens on mortgage lending. Lutnick and Hassett met same day.
PSPA Amendment Expected
Treasury and FHFA must amend the Senior Preferred Stock Purchase Agreements. This is the single biggest catalyst — it determines how the ~$190B senior preferred is retired or converted.
Capital Rule Update
FHFA expected to revise the Enterprise Regulatory Capital Framework. Lower capital requirements would accelerate the timeline significantly.
IPO / Secondary Offering
If PSPA amendments and capital rules align, a secondary offering or IPO could raise the capital needed for conservatorship exit. This is the endgame.
What Could Go Wrong
Any “forecast” page that doesn't lead with risks is lying to you. Here's what keeps me up at night — and I say this as someone with his entire net worth in this trade:
Political Reversal
highEverything hinges on the current administration staying committed. A shift in political priorities, a financial crisis, or midterm election dynamics could delay or derail privatization entirely. I've watched three administrations come and go during my 12+ years holding.
Massive Common Dilution
highIf Treasury converts its ~$190B senior preferred to common stock at anything close to current market prices, common shareholders get crushed. The napkin math below illustrates why this matters — and why I own preferred instead.
Recap Terms That Favor Treasury Over Existing Shareholders
highTreasury could structure the recap to maximize its own return at the expense of common and even junior preferred shareholders. The terms of the PSPA amendment are everything.
Legal Uncertainty
mediumMultiple lawsuits remain unresolved (Collins v. Yellen remand, Lamberth appeal, takings claims). Unfavorable rulings could weaken shareholders' negotiating position.
Capital Requirements Too High
mediumIf the ERCF capital requirements aren't meaningfully reduced, the GSEs might need to raise so much capital that the offering is dilutive to a degree that makes current prices look rich.
Timeline Drag (My Specialty)
mediumI've been expecting this to resolve "within the next year or two" for over a decade. The conservatorship has lasted 17+ years. Patience is not a risk in theory, but it is in practice — opportunity cost is real.
My track record on timing: I first invested in GSE preferred in 2014. I thought it would resolve within 2-3 years. It's been over 12. I've written 300+ articles about it. I've been wrong about the “when” more times than I can count. I've never been wrong about the “what” — the thesis that preferred shareholders get made whole — but being early and being wrong can feel identical for a very long time. See my worst trades →
Frequently Asked Questions
Will FNMA stock go up?
I genuinely don't know, and neither does anyone else. What I can tell you is what drives the price: administrative decisions by Treasury, FHFA, and the White House — not earnings reports or technical analysis. The current administration is the most shareholder-friendly since conservatorship began in 2008, and the political alignment for privatization hasn't been this favorable in 17+ years. But I've been wrong about the timeline before. Many times.
Is Fannie Mae a good investment in 2026?
I am not a financial advisor, and this is not financial advice. I have had the majority of my net worth in GSE preferred shares for over 12 years. I believe the risk/reward is asymmetric, but this is a binary, politically-driven investment with real downside risk. The common stock carries significantly more dilution risk than the preferred. Do your own research — start with my 300+ Seeking Alpha articles if you want to understand my thesis.
What will happen to FNMA preferred stock?
In most privatization scenarios, junior preferred shares (FNMAS, FNMAJ, etc.) would be honored at or near their $25 par value plus accumulated unpaid dividends. You cannot do a capital raise or IPO if you've stiffed your existing preferred shareholders — it would destroy credibility with new investors. This is the structural advantage preferred has over common, and it's the core reason I own preferred instead of common shares.
When will Fannie Mae exit conservatorship?
I've been answering 'soon' for about a decade, so take my timeline estimates with a large grain of salt. That said: the PSPA amendment is expected in 2026 H1, capital rule revisions are in progress, and multiple senior administration officials have publicly committed to privatization. If forced to guess, I'd say 2026-2027 for the exit framework, with the actual offering potentially extending into 2028. But I've been early before. Very early.
Should I buy FNMA or FNMAS?
I personally own preferred shares (FNMAS and 25 other series) rather than common (FNMA) because preferred has structural protection: a fixed par value ($25), accumulated dividends owed, and priority in liquidation. Common shareholders face the full brunt of dilution if Treasury converts its ~$190B senior preferred to common stock. The preferred upside is capped but more certain; the common upside is theoretically higher but carries dramatically more risk. This is not advice — it's what I actually do with my own money.
What is a realistic FNMA price target?
I don't set price targets because FNMA's price is driven by political decisions, not fundamentals you can model with a DCF. That said, I walk through the pro forma restructuring math on this page — if Treasury converts its senior preferred at par and Fannie trades at 12x normalized earnings (~$20B), you can back into implied share prices under different dilution scenarios. The range is wide, which is exactly why I don't pretend to have a single number. Do the math yourself with my scenario calculator.
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If you want to understand the GSE conservatorship in depth, I recommend Shaky Ground by Bethany McLean for the broad strokes and Too Big to Fail by Andrew Ross Sorkin for the 2008 crisis context. Both shaped how I think about what happened and what comes next.