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Mortgage giant Freddie Mac has lined up its sixth CEO in five years — 40-year mortgage and banking industry veteran Diana Reid, who becomes the first woman to lead the company.
Reid, 69, spent 18 years in investment banking and mortgage trading at Credit Suisse First Boston before forming a consulting firm, Beekman Advisors, in 2003.
In the summer of 2007, as the subprime mortgage crisis was building, Reid hired on as an executive at PNC, where she led 1,000 employees serving the bank’s commercial real estate clients in the U.S. and Canada.
Diana Reid
“Over my career, I have learned the most during times of crisis and change,” Reid said in a profile published by the Forté Foundation, a nonprofit that helps women access business education and professional development resources. “I am a problem-solver, and those moments of crisis are new puzzles to solve.”
With former JP Morgan Chase Director Priscilla Almodovar being named as Fannie Mae’s CEO in 2022, both of the mortgage giants are now led by women for the first time in history.
Lance Drummond
“Diana’s proven track record and vast experience in housing finance, real estate and capital markets make her an excellent choice to further Freddie Mac’s mission-driven work,” Freddie Mac independent director Lance Drummond said in a statement. “I have the utmost confidence that she is the right person to take Freddie Mac into the future.”
Reid will also also take a seat on Freddie Mac’s board of directors, the company said.
Since being placed in government conservatorship in 2008, Fannie Mae and Freddie Mac have often found themselves on the hunt for a new CEO.
Although the companies have repaid the $191 billion taxpayer bailout provided during the housing crash — plus interest — Congress has limited the total annual direct compensation for each company’s CEO to a base salary of $600,000 a year.
Other “named executives” can receive deferred compensation on top of their base salary, some of which is based on performance. That means the CEO is the lowest-paid top executive at both companies.
2023 Freddie Mac executive compensation
Source: Freddie Mac 2023 annual report.
In a regulatory disclosure, Freddie Mac said Reid will earn the same $600,000 base salary as her predecessor, Michael DeVito, a former Wells Fargo mortgage executive who retired in March after fewer than three years as CEO.
Although DeVito earned another $51,000 in retirement benefits, his total compensation was dwarfed by four other Freddie Mac executives, including President Michael Hutchins, whose total 2023 compensation of $3.74 million included $1.92 million in deferred salary and $1.07 million in incentive pay.
DeVito and former Fannie Mae CEO Tim Mayopoulos now serve on an advisory board at Aven Financial, a San Francisco-based tech company that offers homeowners a credit card backed by their home equity. Aven raised $142 million in a series D round in July that values the company at more than $1 billion.
Freddie Mac announced in June it will buy up to $2.5 billion in second mortgages over the next 18 months as part of a pilot program that’s raised the hackles of banks that have historically dominated home equity lending.
2023 Fannie Mae executive compensation
Source: Fannie Mae 2023 annual report.
Almodovar is in a similar position at Fannie Mae, with President David Benson pulling down $4.54 million in total compensation last year, more than six times the CEO’s pay.
Sandra Thompson, the head of Fannie and Freddie’s regulator, the Federal Housing Finance Agency, said in a statement that she was “delighted” that Freddie Mac had picked Reid as its next CEO.
Sandra Thompson
“Diana brings with her decades of experience in mortgage banking and capital markets, as well as a proven track record of executive leadership,” Thompson said. “I look forward to working with her to build upon Freddie Mac’s mission to promote affordable housing throughout the country in a safe and sound manner. I am also grateful to Mike Hutchins for his leadership during this interim period as Freddie Mac completed its search for a permanent CEO. I look forward to working with the Freddie Mac team to ensure a smooth transition.”
Federal oversight of CEO pay and other aspects of Fannie Mae and Freddie Mac’s business could be dialed back significantly if the companies are released from government conservatorship.
As president, Donald Trump began the process of “recapitalizing” the companies, but Democrats derailed the plan to privatize Fannie and Freddie after Trump lost the 2020 election — prompting an exodus of top executives from both companies.
Fannie Mae and Freddie Mac build net worth
Source: Fannie Mae and Freddie Mac earnings reports.
Fannie Mae posted a $4.5 billion second-quarter profit and grew its net worth to $86.5 billion, providing $95 billion in liquidity to finance 213,000 home purchases and 45,000 home refinancings. Freddie Mac generated a $2.8 billion Q2 profit and grew its net worth to $53.2 billion, funding 212,000 home purchases, 45,000 refinancings and 92,000 rental units.
As of June 30, Fannie and Freddie’s combined net worth was $139.7 billion, up 11 percent from $125.4 billion at the beginning of the year. Former Freddie Mac CEO Donald Layton has estimated that Fannie and Freddie could be considered recapitalized when their combined net worth hits $150 billion.
But the actual amount needed would depend on how the mortgage giants might be structured when released from conservancy and how much of a backstop the government would provide.
Trump’s opponent in the November election, Vice President Kamala Harris, claimed at a campaign event last month that privatizing Fannie Mae and Freddie Mac could add $1,200 a year in additional interest costs to the typical American mortgage.
Experts consulted by PolitiFact said that “although privatization would likely affect mortgages, it’s difficult to parse out with certainty how profound the changes would be.”
The Harris campaign told PolitiFact that the $1,200-a-year estimate was based on a 2015 analysis by Moody’s Analytics and The Urban Institute.
The Heritage Foundation, a conservative think tank that favors privatization, told PolitiFact that government subsidies and guarantees provided by Fannie and Freddie have driven up home prices by allowing borrowers to take out bigger loans.
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