Freddie Mac Names New CEO

Freddie Mac has tapped Diana Reid, an industry veteran with more than four decades of banking, real estate, capital markets and affordable housing experience, as its next CEO. Reid’s appointment takes effect immediately and she will also be a member of Freddie Mac’s Board of Directors.

Reid replaces Michael Hutchins who has served as interim CEO since Michael DeVito retired in March. Hutchins will remain at Freddie Mac as president.

Reid’s appointment follows search for the next leader of the McLean, Va.-based GSE. Lance Drummond, non-executive chair of Freddie Mac’s board of directors, touted Reid’s experience in housing finance, real estate and capital markets.

Reid’s resume

Reid spent nearly 12 years leading PNC Financial Services Group, Inc.’s real estate business division through the financial crisis and on to a period of significant growth. Prior to joining PNC, Reid founded Beekman Advisors, where she provided real estate finance company owners, CEOs and boards strategic advice and M&A execution. She spent nearly 20 years at the investment bank formerly known as Credit Suisse First Boston in mortgage trading, debt capital markets and financial institutions advisory.

Most recently, she has served as an independent director and advisor to several organizations. She is a member of the board of directors of Welltower, Inc., a real estate investment trust that invests in healthcare infrastructure. Reid also serves on the advisory board of the Pittsburgh Opera and is a founding member of The Denyce Graves Foundation.

She earned her Bachelor of Science degree from California State University and her Master of Business Administration from University of Virginia’s Darden School of Business.

Freddie Mac moves

Despite a 49 percent decrease in overall multifamily lending volume in 2023, Freddie Mac and Fannie Mae continued to provide a large share of the mortgages—42 percent—by dollar volume last year, according to the Mortgage Bankers Association’s annual report released in August. The MBA, which expects an increase in borrowing activity in the coming quarters due to moderating interest rates and other factors, noted that the dollar volume of loans for the GSEs increased by 16 percent from the first quarter to the second quarter of this year.

The FHFA lowered the 2024 combined loan cap for Freddie Mac and Fannie Mae to a combined $140 billion, or $70 billion for each GSE, from a combined $150 billion in 2023. But new rules governing deployment of capital to affordable and workforce housing were expected to help create more housing. Debt issued to workforce housing projects is exempt from the $140 billion cap. Also, each lender’s Low-Income Housing Tax Credit investment caps were raised from $850 million to $1 billion annually.

In its Multifamily 2024 Outlook released in December, Freddie Mac stated the overall long-term picture for multifamily lending was positive for this year. The report noted there were still some short-term headwinds to deal with this in 2024 including high supply and pressure on rent growth in some regions like the Sun Belt and Mountain West but there should be more stabilized cap rates and property values.

The outlook projected an expected gross income growth of 2.1 percent and overall rents to increase by about 2.5 percent. Freddie Mac expected interest rates to remain high throughout much of 2024 and so far, they have. But the Federal Reserve is widely expected to reduce the federal funds rate by at least 25 basis points when it meets next week, which should begin lowering interest rates.

When Freddie Mac released its Midyear Outlook in July, there was a slight uptick in the rent growth predicted, up to 2.7 percent. Combined with a vacancy rate projected to increase to 6 percent, Freddie Mac expects gross rental income growth of 2.5 percent. But it did forecast multifamily performance to remain muted for the remainder of the year as the markets works through a historically high supply of new units.