Alex Karp, CEO of Palantir Technologies, speaks during the Digital X event in Cologne, Germany, on Sept. 7, 2021.
Andreas Rentz | Getty Images
Quasi-governmental financial firm Fannie Mae on Wednesday announced a partnership with defense tech player Palantir to detect mortgage fraud, deepening ties between the federal government and a company that has been a big winner in the second Trump administration.
Priscilla Almodovar, Fannie Mae CEO, said Wednesday at a press event that the goal is for the firm to “identify fraud more proactively” with the help of Palantir, starting with its multi-family housing business. An early test showed that Palantir's technology, which includes elements of artificial intelligence, could identify fraud in seconds that took human investigators two months to find, she said.
Shares of Palantir have jumped more than 140% since President Donald Trump's election win in November. The technology stock has roles in both modernizing the U.S. military and helping to cut costs in government, making it a seemingly strong fit for the administration's stated priorities. CEO Alex Karp said Wednesday that the mortgage fraud detection can be done in a way that “protects the underlying data and protects the privacy of the people submitting their forms.”
Shares of Palantir have dramatically outperformed the broader stock market since the November election.
Fannie Mae and Freddie Mac are government-sponsored enterprises that have been under the conservatorship of the Federal Housing Financing Agency since 2008. The official names of the two enterprises are the Federal National Mortgage Association and the Federal Home Loan Mortgage Corporation, respectively.
FHFA director William Pulte said Wednesday the Palantir program could be expanded to Freddie Mac in the future and that the agency is also talking to Elon Musk's xAI firm about a potential partnership.
“The sky's the limit. We're not just limited to fraud. If there are ways to pull cost out of the system, we want to do it,” Pulte said.
The press release did not include a dollar amount that Fannie Mae would pay to Palantir for this service.
The announcement comes as there is a push to potentially bring Fannie and Freddie out of conservatorship and re-establish them as something closer to independent companies.
“Our great Mortgage Agencies, Fannie Mae and Freddie Mac, provide a vital service to our Nation by helping hardworking Americans reach the American Dream — Home Ownership,” Trump said in a Truth Social post on Tuesday. “I am working on TAKING THESE AMAZING COMPANIES PUBLIC, but I want to be clear, the U.S. Government will keep its implicit GUARANTEES, and I will stay strong in my position on overseeing them as President. These Agencies are now doing very well, and will help us to, MAKE AMERICA GREAT AGAIN!”
The “implicit guarantee” mentioned by Trump refers to the idea among investors that the government won't let Fannie and Freddie default on their mortgage-backed securities. That concept is not legally binding but does help that massive market function and, in theory, lead to lower mortgage rates by reducing the perceived risk to investors in the housing market.
Pulte, who is the grandson of the founder of homebuilding firm PulteGroup, said on CNBC's “Money Movers” that an exact plan for bringing Fannie and Freddie public is still undetermined and could even involve the companies remaining in conservatorship.
“Whether the president decides to sell a small piece, or what have you, that's entirely up to the president,” he said.
There are equity shares of the two firms that trade over the counter, and those shareholders could conceivably see a large profit if Fannie and Freddie are taken public. One such shareholder is Bill Ackman's Pershing Square, and the hedge fund manager has publicly called for IPOs of the two firms.
