President-elect Trump has not presented any direct policy directives concerning the secondary mortgage market. He has not spoken about the status of Fannie Mae or Freddie. Mac. He has not publicly announced the new Secretary of Treasury. He has not released an opinion on the FHFA or its Director Melvin Watt. He has not selected who is going to be in charge of the Department of Justice. Trump will depend partly on advice from these leaders and those in the House and Senate before promoting a policy or directing the Treasury or the DOJ.
Republicans control both the House and Senate. However, they are the same establishment Republicans that promoted replacement entities for the GSEs in both the House (Hensarling) and Senate (Corker, Crapo). These Republicans and others will present their reform or replacement preferences to President-elect Trump later. We will have to wait for the executive response.
Trump is personally familiar with the secondary and primary mortgage markets in the negative sense. His company and its successor, Trump Mortgage LLC and First Meridian, collapsed during a brief run from 2006-2009 before and after the 2008 crash.
So there is not much to go on and further comments require substantial information.
The stock price increases since the election are not based on public information about the future of the GSEs in court or afterwards. Market participants appear to be assuming positive GSE outcomes with the coming changes in the Executive Branch. Even so, market uncertainty about the GSEs remains until actual court outcomes appear, the future of the conservatorships actually determined, GSE-related laws or amended charters are instituted and the secondary mortgage market is reformed and reinitialized. More time is needed before that uncertainty is removed so that the GSE stock prices reflect more the companies fundamentals and long term individual and institutional investors rather than the buying and selling of short term investors and speculators based on positive and negative news and events.
