Fannie Mae and Freddie Mac, key players in the U.S. housing market, are under consideration for a public offering by Trump’s administration. Investors may soon have the opportunity to buy a 5% stake in these government-sponsored enterprises, which have been operating under federal conservatorship for nearly two decades.

Fannie Mae and Freddie Mac are integral to the mortgage industry, buying mortgages from banks and securing them into mortgage-backed securities. After needing a bailout in 2008, both companies have become profitable, with Fannie Mae boasting a market capitalization of $14.6 billion and a stock that has risen over 1,000% in the last year.

While Fannie Mae and Freddie Mac are showing profitability, analysts are cautious about their stocks, with a consensus “Moderate Sell” rating for both. The move towards privatization could face resistance in Congress, concerned about potential impacts on mortgage rates and housing market stability.

CEO Priscilla Almodovar has reported a drop in net income for Fannie Mae, citing a higher provision for credit losses. Despite this, the company’s net worth has increased to $101.6 billion. Freddie Mac, created to work with smaller banks, also experienced a drop in net income due to credit loss provisions, with a market capitalization of $7.7 billion.

Government’s stake in Fannie Mae and Freddie Mac is valued between $500 billion and $700 billion. Analysts are wary of the stocks, with the most bullish price target at $4, implying a 71% downside. Investors are advised to proceed with caution and monitor developments closely before considering an investment in these companies.

Read more at Yahoo Finance: Should You Buy Freddie Mac and Fannie Mae Stocks Before a Government Stake Sale?