Steve Mnuchin, President-elect Trump’s Treasury nominee, caused quite a stir recently when he said in an interview that privatizing the government-sponsored entities Fannie Mae and Freddie Mac would be “on the top-10 list of things” that the administration would seek to get done. By the end of trading that day, the shares of both Fannie and Freddie had shot up over 40% each in reaction to the statement.

It has been well documented what the effects of privatization would be for investors of both GSE’s. Before going into conservatorship during the 2008 recession, shares of Fannie Mae were selling for $66.49 before plummeting to less than $1 over the next 18 months. As a condition of their bailout, profits from the two GSEs have been funneled into the treasury, as opposed to the private investors who own stake in the organizations.

Clearly a move to privatize would be a boon for investors, but what would the average consumer stand to gain or lose from such a move?

The effects of privatizing on the housing market

Most experts in the housing industry have stated that they would welcome the release of Fannie and Freddie from conservatorship, however they ask that it wait until after there are policy reforms in place. This is likely because under the current state of housing policy, experts believe there would be a largely negative effect on the consumer (and therefore the health of the housing market) if the GSEs were to be privatized.

Under their federal status, the GSEs enjoy​ a number of significant benefits that would be eliminated if privatized. Local and State tax exemptions, lower federal borrowing costs, and the market premium placed on their federally backed securities would all disappear and create a situation where capital costs would increase. Experts predict that these increased capital costs would be passed on to consumers in the form of increased mortgage costs. While a family at the higher end of the wealth spectrum may not feel this change, low and moderate income families would likely see their purchasing power take a hit.

Another significant factor to think about would be the fate of the most popular mortgage product in the country today: the 30 year, fixed-rate, pre-payable mortgage. Experts predict this product would likely fade away as private lenders would be averse to taking on the risk associated with this type of mortgage.

On the positive side of the ledger, experts suggest that privatization would allow Fannie and Freddie to investigate merging with other primary mortgage actors. This would give Fannie and Freddie the ability to expand their activities and create efficiency gains.

So the question now becomes: will this even happen? Economist Mark A. Calabria gives it a 50-50 chance that the conservatorship can gets kicked down the road to the next administration. Eventually though, it will happen. With so much at stake for the housing industry, it’s no wonder that insiders would prefer to see policy reform and a framework put in place first.