Zions Acquires Fannie and Freddie Business

New York-based Basis Investment Group sold its Fannie Mae and Freddie Mac multifamily licenses to Zions Bancorporation as lenders put their agency licenses up for sale.

Salt Lake City, Utah-based Zions will acquire Basis Investment’s agency lending programs and mortgage servicing rights. The deal allows Zions the ability to originate Fannie and Freddie loans to borrowers through Fannie’s DUS program and Freddie’s Optigo program.

Basis’s agency business was expected to attract bids in the range of $150 million to $200 million, Commercial Mortgage Alert previously reported, citing sources. The Fannie portion of the business was worth about double to triple the value of its Freddie business because of larger servicing fees that Fannie pays to lenders, CMA reported.

The sales price of the deal was not disclosed. Basis Investment Group declined to comment. Zion’s did not return a request for comment.

Basis, led by Tammy Jones, acquired its license with Fannie in late 2022. At the time, the Federal Reserve started raising interest rates, causing borrowers to default on loans. In 2023, multifamily loan volume fell 49 percent from the prior year, according to the Mortgage Bankers Association.

Fannie and Freddie do not originate loans, but instead use a select group of approved lenders such as Basis to originate loans. Fannie and Freddie buy loans, package them and sell to investors.

In the case of loan losses, Fannie requires that lenders take a share of the losses. Freddie lenders are not required to take losses, except under certain circumstances such as fraud.

Instead, Freddie transfers risk to investors in the capital markets.

More agency licenses have either been sold or are coming up for sale. Late last year, Fifth Third Bank purchased Mechanics Bank’s Fannie Mae DUS line. Multifamily agency lender Lument is also exploring a sale, CMA reported. Ready Capital has hired Piper Sandler to sell its Freddie SBL license, according to the Promote.

Zions, with $89 billion in assets, still needs approval from Fannie and Freddie, according to a release. Agency lending should tick up this year. The Federal Housing Finance Agency increased its multifamily loan cap for Fannie and Freddie to $88 billion in 2026, up from $73 billion in the prior year.

Fannie and Freddie have also been working their way through problematic loans where borrower fraud was suspected. Notably, Walker & Dunlop recently reported it found fraud on $134M in Freddie loans.