Unfortunately, I don't think termination of conservatorship will be that simple. As it stands right now, Fannie and Freddie ARE the mortgage market, guaranteeing 9/10 new loans. Whether Republican or Democrat, it seems the only partisan notion is that the GSE's footprint needs to be reduced, with private capital stepping in to fill some of the void left behind. Most taxpayers also agree with not being left on the hook in time of crisis and therefore have relatively widespread congressional support on this matter (as long as their 30 year fixed and affordable access to credit is preserved).
What would happen if FnF were suddenly released from conservatorship? They would likely continue to dominate the mortgage market. No politician will let that happen without an attempt at reform. Moreover, FnF are woefully undercapitalized currently due to the SPSA 3rd ammendment (aka "dividend sweep"). Releasing them now is probably not in FnF's best interest, although one can argue that continued profitability would solve that issue. Also, what happens when QE tapering begins, and the $85B in monthly bond and MBS purchases are pulled out from underneath FnF? Will they remain as profitable? Could they survive being currently undercapitalized?
It's a complex issue that will take time to resolve, even with net zero being imminent. While this lengthy decision process may suppress our beloved PPS, it's probably the best for long-term sustainability of the housing market and preservation of FnF's role in the mortgage market at some capacity.
I know it's probably not a popular opinion with many on this board, but it's likely that release from conservatorship will take a considerable amount of time. Nevertheless, long and strong. I see only upside as main street and wall street psychology slowly changes. Pending court cases will help too.
