WASHINGTON — Federal Housing Finance Agency Director Bill Pulte responded Thursday to reports that Fannie Mae and Freddie Mac participate in home-financing programs structured to comply with Islamic law.
Pulte clarified that the two government-sponsored enterprises do not originate or issue Sharia-compliant mortgages directly.
“Fannie and Freddie DON’T GIVE OUT SHARIA MORTGAGES,” Pulte told The Gateway Pundit.
That distinction is important, but it does not mean the mortgage giants have no involvement in the programs.
Fannie Mae and Freddie Mac generally do not lend money directly to homebuyers. Private banks and mortgage companies originate home loans, which Fannie and Freddie may later purchase, guarantee or package into mortgage-backed securities. Freddie Mac states plainly in its securities documents that it “does not originate mortgage loans or lend money directly to mortgage borrowers.” Freddie Mac
The controversy involves private companies offering home-financing arrangements designed to comply with Sharia principles prohibiting riba, or interest.
Guidance Residential, a private Islamic home-financing company, describes its program as a co-ownership arrangement. Under that structure, the company and customer purchase a home together. The customer then makes payments to increase his or her ownership share while also paying for the use of the company’s remaining share.
Guidance says Freddie Mac may enter the transaction as an additional investor. The company has also described Fannie Mae as participating in similar transactions.
In other words, Fannie Mae and Freddie Mac do not hand borrowers a special religious mortgage at a government office. However, they may purchase or invest in privately originated financing designed to meet Islamic requirements.
Freddie Mac has acknowledged such arrangements in official mortgage securities documents. One offering circular identifies “arrangements designed to comply with Islamic law” among transactions treated as mortgages for its purposes. Freddie Mac offering circular
That is the heart of the debate.
Pulte’s statement is technically accurate because Fannie and Freddie do not originate these products. But Americans asking whether the companies use their secondary-market power to purchase, support or provide liquidity for Sharia-compliant financing are asking a different question.
Earlier this month, Pulte said FHFA officials were examining the issue after reports circulated that both enterprises accommodated Islamic home-financing arrangements.
“We are looking into this right now. Thanks for mentioning!” Pulte wrote Aug. 13.
On Thursday, Pulte announced that the programs in question would be made available and marketed without regard to religious identity.
“Effective immediately, these programs, along with Kosher and Amish programs, will be open AND marketed to ALL AMERICANS,” Pulte wrote on X.
Opening a financing program to every qualified American may address concerns about religious preferences in access, but it does not settle the larger policy question: Should federally chartered mortgage giants participate in financial products specifically structured around religious law?
Supporters may argue that the arrangements expand homeownership opportunities while remaining subject to American lending, property and contract laws. Critics may question whether institutions operating under federal conservatorship should accommodate any faith-specific financial structure.
Fannie Mae and Freddie Mac have remained under federal conservatorship since the 2008 financial crisis. Together, they play an enormous role in the American housing market by purchasing mortgages from lenders and providing liquidity that allows those lenders to make additional loans.
That makes the precise wording important.
The accurate description is not that Fannie Mae or Freddie Mac personally “give out” Sharia mortgages. They do not originate ordinary mortgages either. The issue is whether they purchase, invest in or otherwise support privately originated home-financing contracts designed to comply with Sharia principles.
Pulte’s clarification answers the origination question. Americans still deserve a complete accounting of the enterprises’ participation, how much money is involved, which companies receive that support and whether the same financing terms are genuinely available to every qualified borrower.
When federal housing institutions are involved, word games cannot replace transparency. The public deserves the full picture—not merely who originates the transaction, but who ultimately purchases it, backs it and assumes the risk.
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