{"id":174749,"date":"2024-06-28T10:50:18","date_gmt":"2024-06-28T16:50:18","guid":{"rendered":"https:\/\/www.biggerpockets.com\/blog\/?p=174749"},"modified":"2024-08-20T02:37:16","modified_gmt":"2024-08-20T08:37:16","slug":"freddie-mac-cfo-resigns-and-goes-to-costar","status":"publish","type":"post","link":"https:\/\/www.biggerpockets.com\/blog\/freddie-mac-cfo-resigns-and-goes-to-costar","title":{"rendered":"Freddie Mac&#8217;s CFO Just Resigned, Will Freddie Change Direction?"},"content":{"rendered":"\n\n      <iframe loading=\"lazy\" frameborder=\"0\" height=\"200\" scrolling=\"no\" src=\"https:\/\/playlist.megaphone.fm\/?e=BIGPOC8624297734\" width=\"100%\"><\/iframe>\r\n  \n\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">As of June <\/span><span data-preserver-spaces=\"true\">28, Freddie Mac CFO Christian Lown will resign from the government-sponsored enterprise (GSE) mortgage provider <\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.housingwire.com\/articles\/costar-group-hires-freddie-macs-christian-lown-as-cfo\/\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">to join CoStar<\/span><\/a><span data-preserver-spaces=\"true\">, the behemoth real estate listing and data and analytics company valued at around <\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.macrotrends.net\/stocks\/charts\/CSGP\/costar\/net-worth\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">$30 billion<\/span><\/a><span data-preserver-spaces=\"true\">.&nbsp;<\/span><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">Usually, when someone leaves a government job for the private sector, there&#8217;s a tacit understanding that the new position comes with less public scrutiny and more\u2014much more\u2014money. There&#8217;s little reason to doubt that is the case here.<\/span><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">Considering Lown oversaw spectacular growth at Freddie Mac and spearheaded the company&#8217;s recently proposed<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.federalregister.gov\/documents\/2024\/04\/22\/2024-08479\/freddie-mac-proposed-purchase-of-single-family-closed-end-second-mortgages-comment-request\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\"> home equity cash-out refi<\/span><\/a><span data-preserver-spaces=\"true\"> program, which allows homeowners to keep the low rate of their current loan while taking out a second, it seems odd that Lown should leave so abruptly, especially when things were seemingly going so well. In last month&#8217;s first-quarter 2024 report, Lown cited some <\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.freddiemac.com\/perspectives\/christian-lown\/freddie-mac-cfo-discusses-first-quarter-2024-financial-and-business\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">impressive numbers for Freddie Mac<\/span><\/a><span data-preserver-spaces=\"true\">, guiding the GSE to $2.8 billion in net income, an increase of $771 million, or 39% year over year.<\/span><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span data-preserver-spaces=\"true\">What Freddie Mac&#8217;s Home Equity Proposal Could Mean for Investors<\/span><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">Freddie Mac&#8217;s low-rate home equity proposal <\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.fhfa.gov\/sites\/default\/files\/2024-06\/413_Better%20Markets.pdf\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">has <\/span><span data-preserver-spaces=\"true\">its<\/span><span data-preserver-spaces=\"true\"> critics<\/span><\/a><span data-preserver-spaces=\"true\">, <\/span><span data-preserver-spaces=\"true\">who feel it could lead to another financial crash.<\/span> <span data-preserver-spaces=\"true\">However, others are celebrating Lown&#8217;s innovative thinking in releasing a possible <\/span><span data-preserver-spaces=\"true\">stimulus of<\/span><span data-preserver-spaces=\"true\"> $3 trillion into the housing market without federal spending.<\/span><span data-preserver-spaces=\"true\">&nbsp;<\/span><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">Meredith Whitney, CEO of Meredith Whitney Advisory Group and one-time &#8220;Oracle of Wall Street&#8221; who predicted the Great Financial Crisis, stated in a column for the <\/span><em><a class=\"editor-rtfLink\" href=\"https:\/\/www.ft.com\/content\/1d287e0c-afda-46f0-9961-9da157b50101\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">Financial Times<\/span><\/a><\/em><span data-preserver-spaces=\"true\">:<\/span><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><em><span data-preserver-spaces=\"true\">&#8220;This was a smart move by Freddie, and the FHFA [Federal Housing Finance Agency] will do <\/span><span data-preserver-spaces=\"true\">a lot of<\/span><span data-preserver-spaces=\"true\"> good by approving it. Despite the more than $32 trillion in equity on homeowner balance sheets, very little of it has <\/span><span data-preserver-spaces=\"true\">been tapped<\/span><span data-preserver-spaces=\"true\"> through home equity loans.&#8221;<\/span><\/em><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">Whitney went on to state the case for the low-interest home equity option:<\/span><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><em><span data-preserver-spaces=\"true\">&#8220;Most people in the U.S. <\/span><span data-preserver-spaces=\"true\">are feeling<\/span><span data-preserver-spaces=\"true\"> the sting of persistent inflation, but older Americans living on a fixed income have <\/span><span data-preserver-spaces=\"true\">been hit<\/span><span data-preserver-spaces=\"true\"> particularly hard. Insurance costs for homeowners have risen well over 11% over three <\/span><span data-preserver-spaces=\"true\">years,<\/span><span data-preserver-spaces=\"true\"> while they are paying more tax. U.S. property tax revenues have risen 26% over the past three years.&#8221;<\/span><\/em><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">For real estate investors, the opportunities are <\/span><span data-preserver-spaces=\"true\">obvious<\/span><span data-preserver-spaces=\"true\">\u2014the chance to borrow against their homes to <\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.biggerpockets.com\/guides\/how-to-flip-houses\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">fix and flip<\/span><\/a><span data-preserver-spaces=\"true\">, <\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.biggerpockets.com\/guides\/brrrr-method\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">BRRRR<\/span><\/a><span data-preserver-spaces=\"true\">, or invest in long-term rentals without worrying about using hard money or paying market interest rates. However, not everyone will be able to benefit from the proposed program.&nbsp;<\/span><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">Whitney explained:&nbsp;<\/span><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><em><span data-preserver-spaces=\"true\">&#8220;Freddie will only buy the second mortgages of borrowers that <\/span><span data-preserver-spaces=\"true\">it<\/span><span data-preserver-spaces=\"true\"> already <\/span><span data-preserver-spaces=\"true\">has<\/span><span data-preserver-spaces=\"true\"> a first mortgage <\/span><span data-preserver-spaces=\"true\">with<\/span><span data-preserver-spaces=\"true\">, and the combined <\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.biggerpockets.com\/blog\/loan-to-value-ratio\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">loan-to-value<\/span><\/a><span data-preserver-spaces=\"true\"> of both the first and the second mortgage cannot exceed 80% of the <\/span><span data-preserver-spaces=\"true\">value of the property<\/span><span data-preserver-spaces=\"true\">.<\/span><span data-preserver-spaces=\"true\"> The current loan-to-value of Freddie&#8217;s mortgage portfolio is 52%. Thus, we estimate Freddie could unlock $980 billion in equity for homeowners.&#8221;<\/span><\/em><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span data-preserver-spaces=\"true\">Leaving Before an Election<\/span><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">With an innovative product<\/span><span data-preserver-spaces=\"true\">, if<\/span><span data-preserver-spaces=\"true\"> passed, <\/span><span data-preserver-spaces=\"true\">likely to<\/span><span data-preserver-spaces=\"true\"> change the landscape of the residential and single\/small <\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.biggerpockets.com\/blog\/finding-multifamily-properties\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">multifamily<\/span><\/a><span data-preserver-spaces=\"true\"> market, it&#8217;s odd that Lown would choose not to see it through and take his lap of honor.<\/span><span data-preserver-spaces=\"true\"> However, timing could be something to do with it.&nbsp;<\/span><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">During the Trump administration, the former president unveiled ambitious plans to completely overhaul Freddie Mac and Fannie Mae, returning <\/span><span data-preserver-spaces=\"true\">it<\/span><span data-preserver-spaces=\"true\"> to the private sector. <\/span><span data-preserver-spaces=\"true\">It<\/span><span data-preserver-spaces=\"true\"> had been in government conservatorship since nearly collapsing during the <\/span><span data-preserver-spaces=\"true\">financial crash of 2008<\/span><span data-preserver-spaces=\"true\">.<\/span><span data-preserver-spaces=\"true\"> Although <\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.marketplace.org\/2021\/01\/15\/trump-administration-ends-push-to-restructure-fannie-mae-and-freddie-mac\/\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">that plan was eventually abandoned<\/span><\/a><span data-preserver-spaces=\"true\"> during the pandemic, with the outcome of the next election by no means a certainty, it could be a <\/span><span data-preserver-spaces=\"true\">prescient<\/span><span data-preserver-spaces=\"true\"> move on Lown&#8217;s part. There has been <\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.yahoo.com\/news\/trump-reelection-seen-boosting-fannie-175656445.html\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">considerable investor optimism<\/span><\/a><span data-preserver-spaces=\"true\"> that a Trump win could again see Freddie and Fannie returned to the private sector.&nbsp;<\/span><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">&#8220;While we believe the challenging logistics associated with privatizing the GSEs make the likelihood of privatization relatively low, history suggests that the market believes a Trump administration could potentially accomplish GSE privatization,&#8221;<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.yahoo.com\/news\/trump-reelection-seen-boosting-fannie-175656445.html\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\"> Keefe, Bruyette &amp; Woods analyst Bose George wrote<\/span><\/a><span data-preserver-spaces=\"true\"> in a note after Trump&#8217;s Iowa primary win. \u201cEven if there is a change in the White House and GSE recapitalization efforts resume, we see limited longer-term value in the common shares.\u201d<\/span><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span data-preserver-spaces=\"true\">The Lure of CoStar<\/span><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">Politics aside, <\/span><span data-preserver-spaces=\"true\">the lure of CoStar cannot be overlooked<\/span><span data-preserver-spaces=\"true\">.&nbsp;<\/span><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">Lown&#8217;s appointment followed the retirement of previous CFO Scott Wheeler. In CoStar, Lown has joined a real estate rocket ship. According to <\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.realestatenews.com\/2024\/04\/23\/costar-revenue-up-12-but-homes-com-advertising-eats-into-profits#\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">recent data,<\/span><\/a><span data-preserver-spaces=\"true\"> the Virginia-based company&#8217;s revenue, as of April 2024, was $656 million, up 12% year over year, and the company is holding cash and cash equivalents of $4.95 billion. It registered gross profits of $515 million in the first quarter of 2023.&nbsp;<\/span><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">The last 12 months have seen CoStar undergo <\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.investing.com\/news\/stock-market-news\/earnings-call-costar-group-shows-robust-growth-and-record-profits-in-2023-93CH-3323505\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">radical growth and expansion<\/span><\/a><span data-preserver-spaces=\"true\">. Its residential real estate site, Homes.com, saw a 600% surge in traffic in Q4, making it the fastest-growing real estate website in the U.S. Another of its sites, Apartments.com, became CoStar&#8217;s first billion-dollar revenue run-rate business. The company also owns loopnet.com.&nbsp;<\/span><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">CoStar&#8217;s overall revenue <\/span><span data-preserver-spaces=\"true\">for<\/span><span data-preserver-spaces=\"true\"> 2024 <\/span><span data-preserver-spaces=\"true\">is projected<\/span><span data-preserver-spaces=\"true\"> to range from $2.75 billion to $2.77 billion. The company recently <\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.costar.com\/article\/628706126\/costar-group-to-acquire-matterport-global-leader-in-immersive-3d-digital-twins-and-artificial-intelligence-for-the-real-estate-industry\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">agreed to purchase the digital twin\/spatial data site Matterport<\/span><\/a><span data-preserver-spaces=\"true\">, which allows viewers to take realistic virtual tours of buildings, for $1.6 billion.<\/span><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">In joining the company, Lown <\/span><span data-preserver-spaces=\"true\">has the opportunity to<\/span><span data-preserver-spaces=\"true\"> expand all its websites, grow its global presence, and increase revenue through a myriad of possibilities, including social media, subscriptions, and advertising.<\/span><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span data-preserver-spaces=\"true\">Final Thoughts<\/span><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">Given a government-associated organization&#8217;s scrutiny and current political uncertainty in the U.S., Lown&#8217;s move away from Freddie Mac after a highly successful tenure is entirely understandable. Reporting directly to CoStar founder and CEO Andy Florance, he has the opportunity to apply years of high-level financial successes to the challenges of further growing a real estate tech company that had morphed from being a commercial real estate resource to a very public-facing website, with two of the largest residential platforms in the country, taking on competitors like Zillow and Realtor.com.&nbsp;<\/span><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">As for Freddie Mac, despite a new innovative product and a healthy bank balance, with an election looming, its future appears as uncertain as the housing market it serves.<\/span><\/p>\n\n\n\n    \n  <div id=\"visibility-group-block_4f0ee0feaf8b62821350d6be1cf65a8a\" class=\"visibility-group  hidden\">\n        \n\n<div id=\"hero-block_aff6fe5a9ce5c8dc678b88fbac251b09\" class=\"first:mt-0 hero-block py-4  alignwide   has-background has-theme-gold-light-background-color has-text-color has-theme-gold-color\">\n    <div\n        class=\" flex flex-wrap lg:flex-nowrap max-w-screen-xl mx-auto px-4 relative lg:items-center \">\n\n        <div class=\"relative z-30 w-full \">\n            <main class=\"py-4\">\n                \n\n<p class=\"has-theme-gold-color has-text-color has-large-font-size wp-block-paragraph\" style=\"font-style:normal;font-weight:800\">Get the Best Loan Today<\/p>\n\n\n\n<p class=\"my-3 md:my-5 lg:my-8 has-slate-900-color has-text-color wp-block-paragraph\" style=\"font-size:16px\">Find trusted, <em><strong>investor-friendly<\/strong><\/em> lenders who specialize in your strategy. <\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><\/p>\n\n\n\n<div id=button-custom-event-block_41c7a9dbb613c352297abaed5a928042 class='button-custom-event'>\n      <a href=\"https:\/\/www.biggerpockets.com\/business\/finder\/lenders\" x-on:click=\"window.analytics.track(&#039;Blog Block | B2C Marketplace Lender Finder&#039;, {\n      referrer: &#039;https:\/\/www.biggerpockets.com\/blog\/freddie-mac-cfo-resigns-and-goes-to-costar&#039;,\n    });\" class=\" btn-shape inline-block no-underline has-background has-theme-gold-background-color has-text-color has-white-color\" target=\"_blank\">Find a Lender<\/a>\n  <\/div>\n\n            <\/main>\n        <\/div>\n\n                <div class=\" first:mt-0 relative h-full lg:flex lg:items-center\">\n            <img decoding=\"async\" class=\"object-cover w-full relative z-20 my-0  rounded-md hidden lg:block\" src=\"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2022\/08\/Marketplace-Blog-Blocks-Lender-v3.png\" alt=\"investor friendly lender, investor friendly real estate loans\" title=\"\">\n        <\/div>\n            <\/div>\n<\/div>\n\n  <\/div>\n  \n\n\n<div class=\"wp-block-group\"><div class=\"wp-block-group__inner-container is-layout-constrained wp-block-group-is-layout-constrained\">\n    \n  <div id=\"visibility-group-block_64dd31c79f00f\" class=\"visibility-group  \">\n        \n\n<div style=\"height:10px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<div id=\"hero-block_64dd2875dba9d\" class=\"first:mt-0 hero-block py-4    has-background has-slate-100-background-color has-text-color has-theme-slate-color\">\n    <div\n        class=\" flex flex-wrap lg:flex-nowrap max-w-screen-xl mx-auto px-4 relative lg:items-center \">\n\n        <div class=\"relative z-30 w-full \">\n            <main class=\"py-4\">\n                \n\n<h3 class=\"wp-block-heading my-0 tracking-tight font-extrabold has-theme-slate-dark-color has-text-color has-large-font-size\">Join the community<\/h3>\n\n\n\n<p class=\"my-3 md:my-5 lg:my-8 has-theme-slate-color has-text-color wp-block-paragraph\" style=\"font-size:16px;font-style:normal;font-weight:400\">Ready to succeed in real estate investing? Create a free BiggerPockets account to learn about investment strategies; ask questions and get answers from our community of +2 million members; connect with investor-friendly agents; and so much more. <\/p>\n\n\n\n<div id=button-custom-event-block_64dd2888dba9e class='button-custom-event'>\n      <a href=\"https:\/\/www.biggerpockets.com\/signup\" x-on:click=\"window.analytics.track(&#039;Blog Block | Acquisition | Free Membership Signup&#039;, {\n      referrer: &#039;https:\/\/www.biggerpockets.com\/blog\/freddie-mac-cfo-resigns-and-goes-to-costar&#039;,\n    });\" class=\" btn-shape inline-block no-underline has-background has-theme-blue-background-color has-text-color has-white-color\" target=\"_blank\">Sign Up<\/a>\n  <\/div>\n\n            <\/main>\n        <\/div>\n\n            <\/div>\n<\/div>\n\n\n<div style=\"height:10px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n  <\/div>\n  <\/div><\/div>\n","protected":false},"excerpt":{"rendered":"<p>Christian Lown is leaving the housing behemoth for another giant, CoStar. Where does that leave Freddie Mac?<\/p>\n","protected":false},"author":613725,"featured_media":174752,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[8,7119],"tags":[],"class_list":["post-174749","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-real-estate-trends","category-biggerpockets-daily"],"acf":[],"comment_count":0,"_links":{"self":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts\/174749","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/users\/613725"}],"replies":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/comments?post=174749"}],"version-history":[{"count":0,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts\/174749\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/media\/174752"}],"wp:attachment":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/media?parent=174749"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/categories?post=174749"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/tags?post=174749"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}