Speaking on Fox Business, Mnuchin said that an agreement between the Treasury and Federal Housing Finance Agency was being worked on that will end the profit sweep that prohibits the companies from making a profit.
"We think now is the time to recapitalize them, make them stronger, and make sure that taxpayers aren't at risk and eventually raise third-party capital so that we restructure them and that in another housing downturn taxpayers are not at risk," Mnuchin said.
The Trump administration last week unveiled its plan to reform the housing finance system. Those plans included ending the conservatorship of Fannie and Freddie 11 years after the housing crisis led to the financial crisis that precipitated the last recession.
Fannie and Freddie received nearly $200 billion in taxpayer bailout money during the 2008 financial crisis.
Shares of Fannie Mae rose 21.35% to $3.29 on Monday, while Freddie Mac jumped 20.23% to $3.09.