John Sununu Advocates for Privatization of Fannie Mae and Freddie Mac Amid New Hampshire’s Housing Crisis
Republican John Sununu, currently running for U.S. Senate in New Hampshire, is championing the privatization of Fannie Mae and Freddie Mac, the mortgage companies backed by the federal government that play a crucial role in ensuring housing loan accessibility for working families.
New Hampshire is grappling with a significant housing affordability issue, with an estimated shortfall of 23,500 housing units. This shortage contributes to increasing demand and rising housing costs in the state.
Fannie Mae and Freddie Mac operate by purchasing mortgages from local banks and lenders, which provides these lenders with the capital needed to issue more loans. These purchased mortgages are then bundled into securities and sold to investors, with the two entities guaranteeing the payments. This system allows smaller lenders to remain competitive in the housing market.
Smaller lenders often offer more flexibility for individuals with unique financial situations, which is particularly beneficial for first-time homebuyers or those with limited financial resources.
Sununu, who served as a U.S. Senator from 2003 to 2009, has previously expressed his views on this matter. In a 2011 Boston Globe editorial, he suggested reducing the roles of Fannie Mae and Freddie Mac, advocating instead for a fully privatized system with large banks managing more mortgages.
“Forty years ago, the two government-sponsored enterprises offered local lenders the only alternative to holding mortgages on their own books,” Sununu remarked. “But today, that liquidity can be provided by at least a dozen large banks that securitize home mortgages, commercial loans, and other assets.”
Sununu further argued against a government-backed mortgage accessibility program, stating that “the U.S. government has dozens of programs that subsidize housing, including discounted loans for first-time buyers, rental vouchers, and traditional low-income housing stock.”
However, Americans for Financial Reform, a consumer rights organization, warns that such a model could make the lending industry more profit-oriented, potentially excluding many working-class buyers from the housing market.
Without governmental backing, the securities sold by Fannie Mae and Freddie Mac could become riskier, prompting investors to seek higher returns, which may lead to increased mortgage payments.
Sununu’s campaign has received financial support from executives likely to benefit from these changes. His campaign disclosed receiving $48,000 from Blackstone executives, the largest commercial landlord in the U.S., and an additional $17,000 from billionaire John Paulson, who manages a hedge fund with significant real estate investments.
Both Paulson and Blackstone supported a 2017 initiative to privatize Fannie Mae and Freddie Mac. NPR reported in February that privatization could bring significant financial gains for Paulson.
Sununu is set to compete against former Massachusetts Sen. Scott Brown in the primary on Sept. 8. The victor is likely to face Democratic Rep. Chris Pappas in the November election.
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