Fannie Mae and Freddie Mac shares dropped 12% as investor optimism about a government IPO faded. The mortgage-finance giants have now lost over 40% since their September peaks, though they remain up 60% from a year ago. The sell-off reflects growing uncertainty about their future.

The decline follows President Donald Trump's directive for the companies to purchase $200 billion in mortgage bonds, framed as a move to lower housing costs. Investors are also watching for policy announcements during Trump's upcoming appearance at the World Economic Forum in Davos. These moves have complicated the path to privatization.

Earlier in 2025, speculation about a potential IPO valued the enterprises around $500 billion, fueling a rally. Recent proposals, however, suggest an offering isn't imminent. The companies have been under government control since the 2008 financial crisis, making any exit a politically charged event.