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Yes that parallels my thinking.
JHD
Yes thank you. Some folks have an ego, (edging God out) that does not allow them to offer their good side.
Perhaps he’s young and has not yet been confronted with a serious life setback that offers
humbleness and clarity to one’s vision of themselves and others.
JHD
Of the 4 items I mentioned that are driving the exuberance of getting paid more money, I believe that there is a combined ZERO % chance of any large amounts of money coming back to old WAMU equity. Maybe 2 years ago I held a 1% chance, but today that is a big fat ZERO. It's been too long, and all the crooks have stolen all the assets. The only way former shareholders of WAMU are going to get more compensation is if Congress gets involved, and that is NOT going to happen. Nice to see COOP taking off. Hope this run helps out with all those old WAMU shareholders who lost big money in the FDIC raid.
And there she goes! Love it. :0)
Because your pessimistic nonsense. 😂
Who gets upset over a fifty cent pull back after a new all time high?
A clown. lol
You'll be ok. 😂
Hit $77.00 new ALL-TIME HIGH=======>real-time chart
$COOP!
Chart======>BREAKOUT of 3rd BULLISH FLAG confirmation IMO
(click chart to zoom in)
And I am a very street smart guy. 
JHD
Just another pretty face who's clueless. Priscilla Almodovar, Fannie Mae CEO.
Almodovar: Yeah, look, I’ve been very fortunate to work with many leaders that I’ve admired. You know, the one I will just say. But Jamie Dimon is probably the best banker that we, I will see in my generation. And this is not me dropping names. I will say he’s someone who genuinely cares about his leaders. Back to your woman question. Jamie doesn’t care if you’re a woman or a man. He just wants a job done and he treats everyone the same. He taught me to be a risk manager. One thing about working at a J.P. Morgan is you don’t realize you’re becoming a risk manager, but he’s very obsessed about end-to-end management, doing the right thing. So that that orientation, I think seeing that leadership and bank that so well run has been quite inspiring. I think back when I first started there were very few women where I was and there was one particular woman who’s now deceased who just like inspired me, like she was like this beautiful, [hard to hear] just this beautiful woman, patrician, and just took me under her wing. And so there were many.
BY: FORTUNE EDITORS - March 20, 2024 at 3:00 AM PDT
Priscilla Almodovar, CEO of Fannie Mae
On this episode of Fortune’s Leadership Next podcast, co-hosts Alan Murray and Michal Lev-Ram talk to Priscilla Almodovar, CEO of Fannie Mae, about how the company has changed since she took over the top role a year ago, who her leadership mentors were, and how both homeowners and renters are faring in the U.S. today. They also discuss how Fannie Mae uses AI and why Almodovar remains surprised that most Americans don’t understand what her company does.
Transcript
Alan Murray: Leadership Next is powered by the folks at Deloitte who, like me, are exploring the changing rules of business leadership and how CEOs are navigating this change.
Welcome to Leadership Next, the podcast about the changing rules of business leadership. I’m Alan Murray.
Michal Lev-Ram: And I’m Michal Lev-Ram.
So today’s guest was Priscilla Almodovar. She’s the CEO of Fannie Mae and she is the only Latina CEO of a Fortune 500 company. We recorded this episode on International Women’s Day, by the way, so it felt very fitting.
Murray: Yeah, I was fascinated, Michal. You don’t know this part of my life, but for the decade that I ran the Washington [D.C.] bureau of the Wall Street Journal, Fannie Mae was a very big presence in my life because they almost ran Washington. They were a huge powerhouse with a massive lobbying machine. And whenever you suggested that anything was amiss with the business model, they would come down on you like a ton of bricks. All of that, of course, changed with the Great Recession, and Fannie Mae went into conservatorship and turned into a very different organization, which she now heads. So I was very interested to hear about the new Fannie Mae.
Lev-Ram: Yeah, clearly some changes over the last, especially going back to the last 15 years or so, and it was it was a great conversation. One of the things that struck me, by the way, which I guess has not changed, is that there are a lot of for all the power that Fannie Mae once had and for the very large role it still plays in the housing market, a lot of Americans don’t really know what this company does and how it’s structured, which, as you said, is pretty unique.
Murray: Which they should, because in most cases they benefit from it. If you’re buying a kind of a normal-sized house, it creates the market that enables you to get the price that you get. So we talk about all of that in this episode. I really enjoyed it. The other thing that people need to understand is Fannie Mae is number 28 on the Fortune 500 list. We’re talking about a really large company.
Lev-Ram: Yeah, absolutely. By the way, I tried to get her to tell us where I should and could buy a home. She didn’t really deliver on that, but she had a lot of other fascinating things to say, including just about her own life experience, her background, and sort of how that positioned her to lead this company today and to, you know, try and fulfill on their mission. So, without further ado, here is our conversation with Priscilla.
Welcome, Priscilla. It’s been a little over a year since you became CEO of Fannie Mae. And I think our first question is just how is it going?
Priscilla Almodovar: Thank you. Thank you for having me. It’s been going great. A year in and I’m hitting my stride. It’s a great, great place to be.
Lev-Ram: Any surprises along the way?
Almodovar: Yeah. Look, you know what has surprised me the most has been a pleasant surprise. Fannie Mae is a great company. I’m surprised how many Americans don’t know what Fannie Mae does. It’s been around for 85 years. We provide liquidity to the housing system, make sure it works for Americans, and a lot of consumers don’t know that. And today it’s critically important. We hold one in four mortgages, $4.3 trillion in assets. And, you know, we’re making housing possible for everyone.
Murray: I’d like to dig in on that a little bit. It is a massive company, it’s like number 28 on the Fortune 500 list. But it’s an unusual company, right? You were chartered by the government during the Great Depression. You’re still, these days since the Great Recession 15 years ago, you’ve been operating under conservatorship. I guess the question I’ve always had is, I understand in the Great Depression why we needed Fannie Mae. There was a crisis. But today we have the deepest financial markets in the world. Why do we need a government-chartered enterprise to be part of that?
Almodovar: Yeah, well, look, taking a step back. We do have a unique business model. So we’re not in the primary mortgage market. We buy mortgages from lenders. We securitize them and sell them to investors and mortgage-backed securities. As part of that, our business model is we manage a lot of risk. We you know, we guarantee the mortgages. So we take credit risk. We take operational risk. We take capital markets risk, cyber risk. So the pipes, making sure the markets function and work. We bring liquidity to the market. And you know, a great example of the role that we play, and we can’t underestimate how important it is to have high functioning liquid housing markets. We’re the only place in the world where you have a 30-year fixed rate mortgage product. And a great, I think, Exhibit A of why it’s so important to have a Fannie Mae is what happened during the pandemic. You know that story has not been told: 1.5 million households kept their home during the really hard time because of our loss mitigation programs. And we kept the mortgage markets going. Today, 99% of those have been resolved.
Murray: And we would yeah, we…
Almodovar: That couldn’t have kind of happened.
Murray: Private banks wouldn’t have done.
Almodovar: Exactly. And it was because we were there. Our business model is high functioning. It’s safe and sound. We had the liquidity, and we were able to do that.
Murray: The other concern in the past, of course, has been that, as you said, you manage risk, but the fear that that risk ends up back on the taxpayer, that it becomes public risk. How do you deal with that?
Almodovar: Yeah, well, look, today the mortgage market in the U.S. is completely different from 15 years ago. So we’re looking ahead today. The loan rules that did not exist before today, loan quality is very different today. So when we talk about the housing market per se, it’s very sound from a credit risk perspective. When I look at our FICO scores, when I look at loan-to-value, debt-to-income ratios, it has never been this safe. So the rules of the road for mortgage finance in the U.S. are very different. As a country, we learned our lesson from 15 years ago and you have regulation. I mean, I just think of Fannie Mae, the company we are today, our business model, we have a capital rule. We do stress testing. We have a very strong regulator in the Federal Housing Finance Agency. This didn’t exist before.
Murray: And I think I’m right that at the end of the day, it also didn’t cost the taxpayers anything.
Almodovar: Thank you for that. Not only did it not cost the taxpayer anything. So I think we drew 119 billion from Treasury. We have paid back 181 billion. So, it’s been a great investment for the taxpayer. It’s been a great deal for the taxpayer. And in the last few years, we’ve been built building capital through retained earnings. Today, Fannie Mae, this was as of December of 2023, 78 billion in capital. We’re still undercapitalized, but we’re building capital. We see how as a business, it’s an operating model that is very well-run and very well risk managed.
Lev-Ram: So can I just go back real quick? And I know, Alan, we want to get into the outlook for 2024. But before we do that, you know, you mentioned being surprised by how there’s still a little bit of a discrepancy and sort of the impact and the role that Fannie Mae plays versus the awareness of Americans, and I’m surprised by that. I mean, going back to the housing crisis 15 years ago, what you were describing that took place during COVID, the fact that there is still kind of this gap in awareness, how much of an issue is that for you? Because, of course, one of the things we’re going to get to is your passion and your mission to make the housing market more equitable, more accessible to all. So talk more about the awareness gap, I guess.
Almodovar: Yeah, look, part of the issue as a, if you will, we’re a B2B company, so we don’t deal directly with the consumer. So right there, the consumer directly does not know us. We deal with our lenders and they deal with the consumer. So that by definition is always an issue. But most consumers don’t understand that the lender who probably originated that mortgage is not the one who continues to own that mortgage. It’s probably not the one who’s servicing the mortgage. I think what we’re trying to do is build that awareness through our home education programs. More and more, we are filling that void for the consumer and leaning into our mission and our charter. I mean, our duty to serve is to make the housing system more fair, more equitable, and I think the consumers are starting to become aware that something is changing. So, for example, when I think about our strategy today, first of all, number one job is liquidity in the market. And the pandemic is just a great example of why that is so important.
But our two strategic objectives are how do we make the housing system more fair and more sustainable? And we look at everyone from renters to homebuyers to homeowners, and it’s about sustainable whatever you might have, a renter or a homeowner. And we’re making it more fair by using technology. So, for example, before, if you were a renter in this country, your rent did not count. Today, through technology, Fannie Mae is taking that credit risk and if the consumer shows us through their bank statements, we can tell what probably is a rent payment, the regularity of that payment, and we could make that consumer eligible.
Murray: That’s huge.
Almodovar: It’s huge.
Murray: You can qualify people instead of a credit score, qualify them on a renter’s score.
Almodovar: That that did not exist two years ago. And it’s something Fannie Mae led the charge. We started with renters. We went to our landlord partners and said, we’re willing to pay for it because we want to the test the concept. And today, I’m happy to say over 500,000 rentals units are reporting their rent payments. On the homeownership side, we have qualified 5,000 now homeowners that did not have FICO scores. Those that didn’t have a FICO score have one today. And those that did have seen an increase of like 38 points. That’s quite meaningful. So, you know, one thing we’ve learned is that housing payment is a housing payment, whether it’s a rental payment or principal and interest payment, and we’re making that count. So it’s those types of innovations that I’m hopeful, job number one for a CEO is to make sure your stories told and people understand that, and I’m very committed to doing that. I mean, our employees come to work every single day very proud for what they do for the country. And it’s meaningful. It’s super meaningful. I mean, housing, as you all know, is probably the number one asset for most people and it’s foundational to life’s outcomes.
Murray: You wrote a great piece for Fortune, appreciate you doing that, called “A Tale of Two Markets,” that we have a problem in the real estate market right now and it’s working very differently for different people. Can you explain that?
Almodovar: Yeah, yeah. It’s funny how quickly the housing market is changing, but that was probably in the Fall or middle of last year. The “tale of two markets” meaning if you’re a home owner today, you’re probably in a very good place. You’re housing, you’re happy. You probably have a mortgage with a 3% or 4% handle.
Murray: I do.
Almodovar: Exactly. You’ve seen house appreciation. I mean, home prices during the pandemic went up like 20%. And last year, home prices were up 7%. This year, we’re expecting home prices to continue going up, not at that same trajectory, maybe more than 3 to 4%. So you’re feeling really good. And that’s what we call the lock-in effect. You’re not moving if you’re not a homeowner, and if you want to be a homeowner, it’s hard because affordability. Mortgage rates are higher. They have come down. In October of last year, mortgage rates hit that 8% number, and psychologically, that’s a big difference from 3%, both psychologically and also your pocketbook. It’s a lot more. So rates have come down, but mortgages are still expensive, and home prices are still high because there’s no supply. So that’s where we have limited tools for supply. We’re on the financing side. But supply, ultimately, is one of the key issues and why it’s a tale of two markets. If you’re a homeowner, you’re feeling really good. If you want to be a homeowner. Or even renters. I mean, today, if you look at our population, let’s say we have 124 million households, a third of them are renters. Those renters, more than 50% are cost burdened. By that we mean they’re spending more than 30% of their income on rent. It’s just affordability is a key issue. And that’s where it’s a tale of two markets.
Lev-Ram: So, Priscilla, I’m going to jump in here and ask a question for a friend. Where should first time buyers be looking? Are there hotspots that are kind of under the radar? And, you know, I’m sitting here in the Bay Area, so this is not the place. But what are you seeing across the country?
Almodovar: Look, I would say my advice to any for anyone who wants to be a homeowner, first time homeowners, by the way, the millennials are driving that demand. When you look at where that demand is coming from, it’s the millennials and, by the way, right behind them, the older Gen Zs are right behind as well. So the first thing I would say is fix your credit. I think one of the things Fannie Mae is doing is really understanding what are the obstacles for first-time homeowners and surprisingly, having a thin credit or no credit is an obstacle. And that’s why these positive rent payments is a key. So if you’re a renter, see if your landlord will report your positive rent. So get that all fixed, I think is job number one. Education is a big part, just generally what it means to be a homeowner. You know, today, if you ask consumers what makes a good life, they usually list owning a home as along with good health, a good job. But you have to understand what it means to be a homeowner, to really understand the cost. You know, throughout the, I would say throughout the country, home prices have gone up. Obviously, there are pockets where they’ve gone up higher, but it’s throughout the country, I would say. But there’s a lot you can do in the meantime. Just getting smart about what it is to be a homeowner and save and it’ll happen. The American dream is still very much alive. It might just take a little longer.
Lev-Ram: Do you see, though, a little bit of a I guess, a psychological shift with the younger generations, with millennials and Gen Z? I mean, I feel like I’ve seen some articles and studies out there that not only are people buying homes later in life, which make sense just given the economy and the housing market, but that there’s also like a little bit of a shift in perception of needing to be a homeowner? Do you look at that?
Almodovar: Look, rent or homeowner to us, we’re agnostic as we were about having someone having a stable, affordable home they can live in. I would say yes, it’s the first time, you know, 35 years old. But I would say the millennials still want to be homeowners. When we do our surveys, having a home is still very much something that millennials are driving. In fact, we do a monthly home purchase sentiment where we try to see how people are feeling, both sellers and future homeowners. And February was the third consecutive month where sellers, by the way, are saying this might be a good time to sell. That’s good news for the sort of spring buying selling season. But purchasers are also saying while they’re pessimistic that they can buy a home, i’s the first time we’re seeing them saying, you know what? Mortgage rates are probably going to come down. Maybe this is the time I should start looking at a home. So I do think the millennials are still driving that demand. If they want to be a homeowner, it’s still being driven by millennials.
Murray: I’m surprised to hear you say you’re agnostic between buying and renting. I mean, I think there used to be a rhetoric that came out of Fannie Mae traditionally that owning a home was kind of a civic virtue, that the goal was to increase the percentage of people who actually owned a home because all sorts of other good things kind of responsibility went along with that. You don’t feel that?
Almodovar: So first of all, the world is very different from, I don’t know, the past, again, I’m living in the future of Fannie Mae.
Murray: Yeah, I’m a guy of the past. I’m an old guy.
Almodovar: Okay. So, I’m in the future. So that’s number one. Number two, a third of households are renters. And I grew up as a renter, so my bias is that being a renter is fine. Now, did my parents dream to have a home? Was that home what changed the trajectory of our life? Absolutely. And today, owning a home is still the number one way where families build generational wealth. And if we’re honest about it, there is still a stubbornly huge gap between white households and nonwhite households and Black households, there’s still this 30% plus or minus gap…
Murray: Wealth gap.
Almodovar: Well, there’s a homeownership gap.
Murray: Which is also a wealth gap.
Almodovar: There’s also a wealth gap. Right. Exactly. And then Latinos, the homeownership gap is about 20%. Latinos, interestingly, are the one cohort they’re having improvements in homeownership. And I think we can talk about that. That partly could be culturally as well. For Latinos, owning a home is something that’s becoming, there was an article recently that it’s becoming a family affair. I mean, they will pool their resources, they will buy that home. So I think if that was a bias before, I think it’s still the number one way to build wealth in this country. It’s still, as I said, when you ask people what’s a good life, they do mention homeownership. I do believe millennials still want to be homeowners and raise a family. But it is not the only way. The same way we have to change the perception of what Fannie Mae is and what we do is being a renter, if you have a stable, affordable home, you have roots in your community as well. So that’s my orientation. Look, today, Fannie Mae, we support, we’re 20% of the rental financing market.
Murray: Is that right?
Almodovar: Yeah, 20, we finance 20% of rental units in the country and in single family we’re about 25% of the entire single family. So we’re the full spectrum and it’s important for Fannie Mae to think about the entire journey of the consumer from renter and renters who want to become a home buyer. And once they’re a home buyer, homeowner, and that’s how we view our work.
[Music starts.]
Murray: Jason Girzadas, the CEO of Deloitte U.S., is the sponsor of this podcast and joins me today. Welcome, Jason.
Jason Girzadas: Thank you, Alan. It’s great to be here.
Murray: I have a sense, Jason, from conversations on Leadership Next and elsewhere, that business leaders today better understand the benefits of having a diverse set of voices at the management table. But what are some of the lessons you’ve learned through Deloitte’s own DEI journey?
Girzadas: Lots of lessons learned I think. We’ve certainly made progress. We feel like that’s a function of a couple of things. Deloitte is very proud to have published twice a transparency report that sets forward long-term expectations for the diversity of our workforce and how we hold ourselves accountable. That is meant to be, and I think has served to be a role model stance for us to take and one that we encourage all businesses to replicate.
The second is to get specific. In addition to transparency, the specific objectives around gender diversity, around Black and Hispanic Latinx, as well as other cohorts that we have really established not only a recruitment and retention, but also advancement goals for.
And finally, adding to the mix, how we intend to hold ourselves accountable for supplier diversity as well as longer-term ambitions for us in this space. So our experience is somewhat emblematic of what a lot of large organizations go through. But for us, the commitment and transparency as well as the specificity around cohorts has made a difference. And we’ve seen positive results in the last two years that we’re hoping to build upon. Do we declare success? Absolutely not. But it’s made all the difference for us.
Murray: Jason, thanks for your perspective and thanks for sponsoring Leadership Next.
Girzadas: Thank you.
[Music ends.]
Lev-Ram: Priscilla, you brought this up and I want to dig a little bit deeper, but one of the things we wanted to talk to you about is you and you are the only Latina CEO on the Fortune 500. So, tell us more about your background and how it informs your leadership today at Fannie Mae.
Almodovar: Yeah, look, I’m the only but I’m so I’m so optimistic it won’t be for long because, again, the Latino cohort is real and women also. But the Latino cohort is having a lot of gains educationally and otherwise. So as I mentioned, I grew up in Brooklyn. My family there, I’m Puerto Rican. My parents came to the mainland in the 1950s. Like many Puerto Rican, the Puerto Rican diaspora for a better life. And I grew up in a very optimistic household and at my kitchen table, I heard, like probably many American families do today, talked about a good job. Education was like, you know, that’s what neither of my parents at the time had gone to college. So an education and saving for a home. And I still remember when I was five years old, they bought their first home. I still remember the first night I slept in my room. And I think that’s informed a lot of what I do. And I’ve considered myself very lucky. I’ve had a 30 year plus career in finance and about 20 years ago discovered this, what’s a unique part of finance is housing finance. And I’ve been able to build a career. I’ve had, this will be my fifth role in housing. Each of them I had worked with Fannie Mae. So the one great thing about joining this company, I came in with great admiration for the company for what they do, and I’ve just been very fortunate with each one to have a larger platform to influence more national policy issues.
Murray: When did it first occur to you, having grown up the way you described? When did it first occur to you that you could be CEO of one of the 30 largest companies in the country?
Almodovar: You know, I guess I never thought of “I’m going to be a CEO,” if I’m honest. I always, even from a young age, thought I would be leading something. I didn’t know what. Yes. I mean, I tell you, I tell this funny story, I it’s a bit embarrassing, but at six years old, I had an attache case as much as my book bag. So I think that says it all. And I think it comes really from my parents. I mean, my mom is now deceased. She thought she could do anything. I mean, it was just like this very this can do. And I just think I have inherited that, that I could figure it out.
Murray: You must have had moments along the way coming up through Wall Street finance where you were sitting in a room surrounded by a bunch of guys and where you said to yourself, this system is never going to allow me to get to the top.
Almodovar: That’s not true.
Murray: You never felt it.
Almodovar: You know, it’s the kind of thing where, again, look, in the 1990s there were very few women in finance, in law, in banking, and I never saw that as a as an obstacle. You know, if anything, I was in the room. I worked so darn hard. I wasn’t really trying to figure out the man woman thing. I just did my job and did it well and did project finance for the first ten years. And then I went to J.P. Morgan. I went to a state housing finance agency for three years, then went to J.P. Morgan, had an incredible career there. Were there times when I was the only woman in the room? Absolutely. But I still did my work really well and I think if anything, one of the great things of my position now at my age, you know, I could help change how people think. The face of leadership is changing, and I am just so excited to be part of that. So I look different. But I’m a leader and I really believe, back to your question about me as a leader. I think there’s leaders amongst all of us. So one of my leadership styles and at Fannie Mae, this was a little bit surprising, the first few months, but now the company has embraced it. I talk to the entire organization because as a leader, you want to hear what everyone I mean, we all contribute to the work we do. And it’s probably because I believe there’s a leader amongst all of us. So I never let that get in the way, Alan, being one of the few women.
Lev-Ram: Who are some of the other leaders you’ve worked with and for along the way, you know, male or female, that have really you think, you know, helped kind of paved the way or made a big impact on you?
Almodovar: Yeah, look, I’ve been very fortunate to work with many leaders that I’ve admired. You know, the one I will just say. But Jamie Dimon is probably the best banker that we, I will see in my generation. And this is not me dropping names. I will say he’s someone who genuinely cares about his leaders. Back to your woman question. Jamie doesn’t care if you’re a woman or a man. He just wants a job done and he treats everyone the same. He taught me to be a risk manager. One thing about working at a J.P. Morgan is you don’t realize you’re becoming a risk manager, but he’s very obsessed about end-to-end management, doing the right thing. So that that orientation, I think seeing that leadership and bank that so well run has been quite inspiring. I think back when I first started there were very few women where I was and there was one particular woman who’s now deceased who just like inspired me, like she was like this beautiful, [hard to hear] just this beautiful woman, patrician, and just took me under her wing. And so there were many.
Murray: That’s great. You know, we have a lot of conversations on this podcast about the purpose of business. Yeah. And it gets into debates over, you know, Milton Friedman famously said 50 years ago, the social responsibility is to make a profit for shareholders. We’ve had Jamie Dimon actually led at the Business Roundtable, this whole notion of stakeholder capitalism, redefinition of the purpose of the corporation. You’re in an interesting place because you do have a social mission in your charter. You have shareholders, but you have a clear social mission in your charter. How do you think about that debate? Do you think your model is a better model? That it needs to be infused in other companies? Where where are you on the great stakeholder capitalism debate?
Almodovar: Yeah, no, it’s a great question. You know, at Fannie Mae, as you say, it’s in our charter. So we have to balance mission and safety and soundness and a big part of our business model today is we need to get to that investable return. So return and running the company well is really important. It’s the only way we’re going to build capital right now. What I think is incredible is to me, the innovation at a Fannie Mae happens at the intersection of mission and safety and soundness and profitability, and it’s that tension where we probably do the best work. And, you know, I’m a believer, again, at Fannie Mae, it’s a lot easier because it’s what we do. That our workforce needs to look like the future homeowners. I mean, if I look at who the future homeowners are in this country, there’s a study out there that says by 2040, 90% of homeowners will be people of color. Well, our workforce should look like that, who we partner with, the suppliers we work with. So it’s very much of who we are to us is just how we run our business. To do it well, we have to understand our future homeowner, and that’s what we’re doing.
Murray: Mission and performance.
Almodovar: Mission and performance go hand in hand. You know, serving, I mean, this is true of I think many companies is, you have many stakeholders. You have shareholders for sure. But you’re a citizen of the communities where you work, you’re a citizen to your employees. So I think companies, well-run companies, and I think today most companies, I think, would say they really have to look at the full picture. And by the way, shareholders also expect that—they want good corporate citizens.
Murray: Most of them.
Almodovar: Yes.
Murray: Your shareholders, maybe.
Almodovar: Yes. Yes. No, I think it’s true of you know, I think, look, return is important. And by the way, there’s nothing wrong with that either. Right? So, you know, we are a capitalist society. And I think you can do good and make money at the same time, and the two do not have to be inconsistent.
Lev-Ram: So on that note, I wanted to also bring up the fact we recently had the State of the Union address and housing came up, right? This is a big focus. And while we’ve got plenty of bright spots in the economy, the housing market consistently has been really tough for a lot of people. Again, first time buyers and current homeowners as well because of mortgage rates. As you look out to 2024 and given certain new incentives now that are coming into the fray, like what do you see happening? I mean, is there going to be an easing up here and if so, when? And just what can you tell us about looking out into the future?
Almodovar: Yeah, look, our economists would say that 2024, the economy is still growing at a slower rate. You know, inflation in is coming down. The labor market is still strong. Even the news today, I mean, jobs and there’s still noise in the data, but still strong. We do think that mortgage rates will come down more, settle more in the sixes, low sixes, maybe high fives by 2025. So we do see mortgage rates coming down. So home sales, we expect this year home sales will go up. Last year, home sales were the lowest they’ve been in 30 years. So there’s some good news in the housing market we’re seeing. I mentioned the sentiment that sellers are saying, hmm, maybe this is a good time to sell. We’re seeing new home construction. So we as a country have not built housing at the rate that of new household formation. So new homes are coming online, new built homes. So supply is coming. That helps hopefully will help prices. We think prices will continue to go up, but not at the same pace. So there is some good news. And more and more, one thing that makes me optimistic is, as I mentioned, I used to run a state housing finance agency, I’m finding more mayors and governors are talking about housing because ultimately there’s an issue of supply. We need more supply of housing, you know, depending on which number you look at. Some people say we need 2 million more units of housing. Some people say we need 7 million. The point is we need a lot more housing and supply is ultimately a local issue. It’s a zoning issue. It’s a regulatory building code issue. And the fact that more folks are talking about that makes me optimistic.
Murray: How is AI going to change Fannie Mae?
Almodovar: Yeah, look, so so Fannie Mae has been using artificial intelligence and machine learning for a long time. Like we were the first ones to come up with a loan origination system that’s machine learning, that looks at how it would give an answer. So we’re looking at it very closely. So it’s helping us in our underwriting. So I mentioned rent as being, that’s that’s AI that’s doing that. What’s really exciting to me today is the consumer is changing and the economy. So think of the gig economy. So can we use machine learning and AI to look at bank statements differently to allow non-salary W2 income to count? Right. That would be one example. We’re using AI to understand our climate risk better. Right. Can we, from an informational perspective? Data understanding climate risk is another area. Collateral quality appraisal biases. So we’re using AI to help us look at appraisals differently. How appraisers judge a home and take out biases there. So there are many uses. We are very committed to taking a slower path and doing, you know, we have a governance model, an ethical framework to make sure that we’re doing it transparently. If we use a model that we could explain how it made decisions. We look at privacy and equity. We’re very excited about it.
And obviously one that doesn’t get a lot of hype, but I’m excited about is how we run the company. Think about fraud detection. You know, how do I know when I get a W-2, it’s not a fraudulent W-2. So a big part of AI for a financial institution like a Fannie Mae is fraud detection. Think of cyber. Think of all the anomalies. So looking at anomalies from a fraud perspective, from a cyber perspective. So there are many use cases. And that’s what we’re exploring now because there’s a lot of opportunities. So I’m very excited. One of the books I just read was The Worlds I See by Dr. Fei-Fei Lee.
Murray: Oh cool.
Almodovar: It’s very well done. And it’s good for all of us to understand, like, what is AI? What’s machine learning and how do we bring—her big takeaway is how do we bring a human-centered approach to all this work? So really, it’s a book I recommend, and I know it had an impact on me.
Murray: Fascinating conversation. Priscilla, thank you so much for taking the time to be with us. I hope we’ll see you at Fortune‘s Most Powerful Women event in California. You belong there.
Almodovar: Looking forward to it. Yeah. Thank you.
Lev-Ram: Thank you. Thank you, Priscilla.
Almodovar: Nice to see you.
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Fannie Mae (FNMA)
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of 789174
navycmdr
Re: None
Wednesday, 03/20/2024 9:52:13 AM
$Booooom ! - Why the $CEO of $Fannie $Mae believes
a company’s mission and performance can—and should—go hand in hand
Almodovar: Thank you for that. Not only did it not cost the taxpayer anything.
So I think we drew 119 billion from Treasury. We have paid back 181 billion.
So, it’s been a great investment for the taxpayer. It’s been a great deal for the taxpayer.
And in the last few years, we’ve been built building capital through retained earnings.
Today, Fannie Mae, this was as of December of 2023, 78 billion in capital.
We’re still undercapitalized, but we’re building capital. We see how
as a business, it’s an operating model that is very well-run and very well risk managed.
BY: FORTUNE EDITORS - March 20, 2024 at 3:00 AM PDT
Priscilla Almodovar, CEO of Fannie Mae
On this episode of Fortune’s Leadership Next podcast, co-hosts Alan Murray and Michal Lev-Ram talk to Priscilla Almodovar, CEO of Fannie Mae, about how the company has changed since she took over the top role a year ago, who her leadership mentors were, and how both homeowners and renters are faring in the U.S. today. They also discuss how Fannie Mae uses AI and why Almodovar remains surprised that most Americans don’t understand what her company does.
Transcript
Alan Murray: Leadership Next is powered by the folks at Deloitte who, like me, are exploring the changing rules of business leadership and how CEOs are navigating this change.
Welcome to Leadership Next, the podcast about the changing rules of business leadership. I’m Alan Murray.
Michal Lev-Ram: And I’m Michal Lev-Ram.
So today’s guest was Priscilla Almodovar. She’s the CEO of Fannie Mae and she is the only Latina CEO of a Fortune 500 company. We recorded this episode on International Women’s Day, by the way, so it felt very fitting.
Murray: Yeah, I was fascinated, Michal. You don’t know this part of my life, but for the decade that I ran the Washington [D.C.] bureau of the Wall Street Journal, Fannie Mae was a very big presence in my life because they almost ran Washington. They were a huge powerhouse with a massive lobbying machine. And whenever you suggested that anything was amiss with the business model, they would come down on you like a ton of bricks. All of that, of course, changed with the Great Recession, and Fannie Mae went into conservatorship and turned into a very different organization, which she now heads. So I was very interested to hear about the new Fannie Mae.
Lev-Ram: Yeah, clearly some changes over the last, especially going back to the last 15 years or so, and it was it was a great conversation. One of the things that struck me, by the way, which I guess has not changed, is that there are a lot of for all the power that Fannie Mae once had and for the very large role it still plays in the housing market, a lot of Americans don’t really know what this company does and how it’s structured, which, as you said, is pretty unique.
Murray: Which they should, because in most cases they benefit from it. If you’re buying a kind of a normal-sized house, it creates the market that enables you to get the price that you get. So we talk about all of that in this episode. I really enjoyed it. The other thing that people need to understand is Fannie Mae is number 28 on the Fortune 500 list. We’re talking about a really large company.
Lev-Ram: Yeah, absolutely. By the way, I tried to get her to tell us where I should and could buy a home. She didn’t really deliver on that, but she had a lot of other fascinating things to say, including just about her own life experience, her background, and sort of how that positioned her to lead this company today and to, you know, try and fulfill on their mission. So, without further ado, here is our conversation with Priscilla.
Welcome, Priscilla. It’s been a little over a year since you became CEO of Fannie Mae. And I think our first question is just how is it going?
Priscilla Almodovar: Thank you. Thank you for having me. It’s been going great. A year in and I’m hitting my stride. It’s a great, great place to be.
Lev-Ram: Any surprises along the way?
Almodovar: Yeah. Look, you know what has surprised me the most has been a pleasant surprise. Fannie Mae is a great company. I’m surprised how many Americans don’t know what Fannie Mae does. It’s been around for 85 years. We provide liquidity to the housing system, make sure it works for Americans, and a lot of consumers don’t know that. And today it’s critically important. We hold one in four mortgages, $4.3 trillion in assets. And, you know, we’re making housing possible for everyone.
Murray: I’d like to dig in on that a little bit. It is a massive company, it’s like number 28 on the Fortune 500 list. But it’s an unusual company, right? You were chartered by the government during the Great Depression. You’re still, these days since the Great Recession 15 years ago, you’ve been operating under conservatorship. I guess the question I’ve always had is, I understand in the Great Depression why we needed Fannie Mae. There was a crisis. But today we have the deepest financial markets in the world. Why do we need a government-chartered enterprise to be part of that?
Almodovar: Yeah, well, look, taking a step back. We do have a unique business model. So we’re not in the primary mortgage market. We buy mortgages from lenders. We securitize them and sell them to investors and mortgage-backed securities. As part of that, our business model is we manage a lot of risk. We you know, we guarantee the mortgages. So we take credit risk. We take operational risk. We take capital markets risk, cyber risk. So the pipes, making sure the markets function and work. We bring liquidity to the market. And you know, a great example of the role that we play, and we can’t underestimate how important it is to have high functioning liquid housing markets. We’re the only place in the world where you have a 30-year fixed rate mortgage product. And a great, I think, Exhibit A of why it’s so important to have a Fannie Mae is what happened during the pandemic. You know that story has not been told: 1.5 million households kept their home during the really hard time because of our loss mitigation programs. And we kept the mortgage markets going. Today, 99% of those have been resolved.
Murray: And we would yeah, we…
Almodovar: That couldn’t have kind of happened.
Murray: Private banks wouldn’t have done.
Almodovar: Exactly. And it was because we were there. Our business model is high functioning. It’s safe and sound. We had the liquidity, and we were able to do that.
Murray: The other concern in the past, of course, has been that, as you said, you manage risk, but the fear that that risk ends up back on the taxpayer, that it becomes public risk. How do you deal with that?
Almodovar: Yeah, well, look, today the mortgage market in the U.S. is completely different from 15 years ago. So we’re looking ahead today. The loan rules that did not exist before today, loan quality is very different today. So when we talk about the housing market per se, it’s very sound from a credit risk perspective. When I look at our FICO scores, when I look at loan-to-value, debt-to-income ratios, it has never been this safe. So the rules of the road for mortgage finance in the U.S. are very different. As a country, we learned our lesson from 15 years ago and you have regulation. I mean, I just think of Fannie Mae, the company we are today, our business model, we have a capital rule. We do stress testing. We have a very strong regulator in the Federal Housing Finance Agency. This didn’t exist before.
Murray: And I think I’m right that at the end of the day, it also didn’t cost the taxpayers anything.
Almodovar: Thank you for that. Not only did it not cost the taxpayer anything. So I think we drew 119 billion from Treasury. We have paid back 181 billion. So, it’s been a great investment for the taxpayer. It’s been a great deal for the taxpayer. And in the last few years, we’ve been built building capital through retained earnings. Today, Fannie Mae, this was as of December of 2023, 78 billion in capital. We’re still undercapitalized, but we’re building capital. We see how as a business, it’s an operating model that is very well-run and very well risk managed.
Lev-Ram: So can I just go back real quick? And I know, Alan, we want to get into the outlook for 2024. But before we do that, you know, you mentioned being surprised by how there’s still a little bit of a discrepancy and sort of the impact and the role that Fannie Mae plays versus the awareness of Americans, and I’m surprised by that. I mean, going back to the housing crisis 15 years ago, what you were describing that took place during COVID, the fact that there is still kind of this gap in awareness, how much of an issue is that for you? Because, of course, one of the things we’re going to get to is your passion and your mission to make the housing market more equitable, more accessible to all. So talk more about the awareness gap, I guess.
Almodovar: Yeah, look, part of the issue as a, if you will, we’re a B2B company, so we don’t deal directly with the consumer. So right there, the consumer directly does not know us. We deal with our lenders and they deal with the consumer. So that by definition is always an issue. But most consumers don’t understand that the lender who probably originated that mortgage is not the one who continues to own that mortgage. It’s probably not the one who’s servicing the mortgage. I think what we’re trying to do is build that awareness through our home education programs. More and more, we are filling that void for the consumer and leaning into our mission and our charter. I mean, our duty to serve is to make the housing system more fair, more equitable, and I think the consumers are starting to become aware that something is changing. So, for example, when I think about our strategy today, first of all, number one job is liquidity in the market. And the pandemic is just a great example of why that is so important.
But our two strategic objectives are how do we make the housing system more fair and more sustainable? And we look at everyone from renters to homebuyers to homeowners, and it’s about sustainable whatever you might have, a renter or a homeowner. And we’re making it more fair by using technology. So, for example, before, if you were a renter in this country, your rent did not count. Today, through technology, Fannie Mae is taking that credit risk and if the consumer shows us through their bank statements, we can tell what probably is a rent payment, the regularity of that payment, and we could make that consumer eligible.
Murray: That’s huge.
Almodovar: It’s huge.
Murray: You can qualify people instead of a credit score, qualify them on a renter’s score.
Almodovar: That that did not exist two years ago. And it’s something Fannie Mae led the charge. We started with renters. We went to our landlord partners and said, we’re willing to pay for it because we want to the test the concept. And today, I’m happy to say over 500,000 rentals units are reporting their rent payments. On the homeownership side, we have qualified 5,000 now homeowners that did not have FICO scores. Those that didn’t have a FICO score have one today. And those that did have seen an increase of like 38 points. That’s quite meaningful. So, you know, one thing we’ve learned is that housing payment is a housing payment, whether it’s a rental payment or principal and interest payment, and we’re making that count. So it’s those types of innovations that I’m hopeful, job number one for a CEO is to make sure your stories told and people understand that, and I’m very committed to doing that. I mean, our employees come to work every single day very proud for what they do for the country. And it’s meaningful. It’s super meaningful. I mean, housing, as you all know, is probably the number one asset for most people and it’s foundational to life’s outcomes.
Murray: You wrote a great piece for Fortune, appreciate you doing that, called “A Tale of Two Markets,” that we have a problem in the real estate market right now and it’s working very differently for different people. Can you explain that?
Almodovar: Yeah, yeah. It’s funny how quickly the housing market is changing, but that was probably in the Fall or middle of last year. The “tale of two markets” meaning if you’re a home owner today, you’re probably in a very good place. You’re housing, you’re happy. You probably have a mortgage with a 3% or 4% handle.
Murray: I do.
Almodovar: Exactly. You’ve seen house appreciation. I mean, home prices during the pandemic went up like 20%. And last year, home prices were up 7%. This year, we’re expecting home prices to continue going up, not at that same trajectory, maybe more than 3 to 4%. So you’re feeling really good. And that’s what we call the lock-in effect. You’re not moving if you’re not a homeowner, and if you want to be a homeowner, it’s hard because affordability. Mortgage rates are higher. They have come down. In October of last year, mortgage rates hit that 8% number, and psychologically, that’s a big difference from 3%, both psychologically and also your pocketbook. It’s a lot more. So rates have come down, but mortgages are still expensive, and home prices are still high because there’s no supply. So that’s where we have limited tools for supply. We’re on the financing side. But supply, ultimately, is one of the key issues and why it’s a tale of two markets. If you’re a homeowner, you’re feeling really good. If you want to be a homeowner. Or even renters. I mean, today, if you look at our population, let’s say we have 124 million households, a third of them are renters. Those renters, more than 50% are cost burdened. By that we mean they’re spending more than 30% of their income on rent. It’s just affordability is a key issue. And that’s where it’s a tale of two markets.
Lev-Ram: So, Priscilla, I’m going to jump in here and ask a question for a friend. Where should first time buyers be looking? Are there hotspots that are kind of under the radar? And, you know, I’m sitting here in the Bay Area, so this is not the place. But what are you seeing across the country?
Almodovar: Look, I would say my advice to any for anyone who wants to be a homeowner, first time homeowners, by the way, the millennials are driving that demand. When you look at where that demand is coming from, it’s the millennials and, by the way, right behind them, the older Gen Zs are right behind as well. So the first thing I would say is fix your credit. I think one of the things Fannie Mae is doing is really understanding what are the obstacles for first-time homeowners and surprisingly, having a thin credit or no credit is an obstacle. And that’s why these positive rent payments is a key. So if you’re a renter, see if your landlord will report your positive rent. So get that all fixed, I think is job number one. Education is a big part, just generally what it means to be a homeowner. You know, today, if you ask consumers what makes a good life, they usually list owning a home as along with good health, a good job. But you have to understand what it means to be a homeowner, to really understand the cost. You know, throughout the, I would say throughout the country, home prices have gone up. Obviously, there are pockets where they’ve gone up higher, but it’s throughout the country, I would say. But there’s a lot you can do in the meantime. Just getting smart about what it is to be a homeowner and save and it’ll happen. The American dream is still very much alive. It might just take a little longer.
Lev-Ram: Do you see, though, a little bit of a I guess, a psychological shift with the younger generations, with millennials and Gen Z? I mean, I feel like I’ve seen some articles and studies out there that not only are people buying homes later in life, which make sense just given the economy and the housing market, but that there’s also like a little bit of a shift in perception of needing to be a homeowner? Do you look at that?
Almodovar: Look, rent or homeowner to us, we’re agnostic as we were about having someone having a stable, affordable home they can live in. I would say yes, it’s the first time, you know, 35 years old. But I would say the millennials still want to be homeowners. When we do our surveys, having a home is still very much something that millennials are driving. In fact, we do a monthly home purchase sentiment where we try to see how people are feeling, both sellers and future homeowners. And February was the third consecutive month where sellers, by the way, are saying this might be a good time to sell. That’s good news for the sort of spring buying selling season. But purchasers are also saying while they’re pessimistic that they can buy a home, i’s the first time we’re seeing them saying, you know what? Mortgage rates are probably going to come down. Maybe this is the time I should start looking at a home. So I do think the millennials are still driving that demand. If they want to be a homeowner, it’s still being driven by millennials.
Murray: I’m surprised to hear you say you’re agnostic between buying and renting. I mean, I think there used to be a rhetoric that came out of Fannie Mae traditionally that owning a home was kind of a civic virtue, that the goal was to increase the percentage of people who actually owned a home because all sorts of other good things kind of responsibility went along with that. You don’t feel that?
Almodovar: So first of all, the world is very different from, I don’t know, the past, again, I’m living in the future of Fannie Mae.
Murray: Yeah, I’m a guy of the past. I’m an old guy.
Almodovar: Okay. So, I’m in the future. So that’s number one. Number two, a third of households are renters. And I grew up as a renter, so my bias is that being a renter is fine. Now, did my parents dream to have a home? Was that home what changed the trajectory of our life? Absolutely. And today, owning a home is still the number one way where families build generational wealth. And if we’re honest about it, there is still a stubbornly huge gap between white households and nonwhite households and Black households, there’s still this 30% plus or minus gap…
Murray: Wealth gap.
Almodovar: Well, there’s a homeownership gap.
Murray: Which is also a wealth gap.
Almodovar: There’s also a wealth gap. Right. Exactly. And then Latinos, the homeownership gap is about 20%. Latinos, interestingly, are the one cohort they’re having improvements in homeownership. And I think we can talk about that. That partly could be culturally as well. For Latinos, owning a home is something that’s becoming, there was an article recently that it’s becoming a family affair. I mean, they will pool their resources, they will buy that home. So I think if that was a bias before, I think it’s still the number one way to build wealth in this country. It’s still, as I said, when you ask people what’s a good life, they do mention homeownership. I do believe millennials still want to be homeowners and raise a family. But it is not the only way. The same way we have to change the perception of what Fannie Mae is and what we do is being a renter, if you have a stable, affordable home, you have roots in your community as well. So that’s my orientation. Look, today, Fannie Mae, we support, we’re 20% of the rental financing market.
Murray: Is that right?
Almodovar: Yeah, 20, we finance 20% of rental units in the country and in single family we’re about 25% of the entire single family. So we’re the full spectrum and it’s important for Fannie Mae to think about the entire journey of the consumer from renter and renters who want to become a home buyer. And once they’re a home buyer, homeowner, and that’s how we view our work.
[Music starts.]
Murray: Jason Girzadas, the CEO of Deloitte U.S., is the sponsor of this podcast and joins me today. Welcome, Jason.
Jason Girzadas: Thank you, Alan. It’s great to be here.
Murray: I have a sense, Jason, from conversations on Leadership Next and elsewhere, that business leaders today better understand the benefits of having a diverse set of voices at the management table. But what are some of the lessons you’ve learned through Deloitte’s own DEI journey?
Girzadas: Lots of lessons learned I think. We’ve certainly made progress. We feel like that’s a function of a couple of things. Deloitte is very proud to have published twice a transparency report that sets forward long-term expectations for the diversity of our workforce and how we hold ourselves accountable. That is meant to be, and I think has served to be a role model stance for us to take and one that we encourage all businesses to replicate.
The second is to get specific. In addition to transparency, the specific objectives around gender diversity, around Black and Hispanic Latinx, as well as other cohorts that we have really established not only a recruitment and retention, but also advancement goals for.
And finally, adding to the mix, how we intend to hold ourselves accountable for supplier diversity as well as longer-term ambitions for us in this space. So our experience is somewhat emblematic of what a lot of large organizations go through. But for us, the commitment and transparency as well as the specificity around cohorts has made a difference. And we’ve seen positive results in the last two years that we’re hoping to build upon. Do we declare success? Absolutely not. But it’s made all the difference for us.
Murray: Jason, thanks for your perspective and thanks for sponsoring Leadership Next.
Girzadas: Thank you.
[Music ends.]
Lev-Ram: Priscilla, you brought this up and I want to dig a little bit deeper, but one of the things we wanted to talk to you about is you and you are the only Latina CEO on the Fortune 500. So, tell us more about your background and how it informs your leadership today at Fannie Mae.
Almodovar: Yeah, look, I’m the only but I’m so I’m so optimistic it won’t be for long because, again, the Latino cohort is real and women also. But the Latino cohort is having a lot of gains educationally and otherwise. So as I mentioned, I grew up in Brooklyn. My family there, I’m Puerto Rican. My parents came to the mainland in the 1950s. Like many Puerto Rican, the Puerto Rican diaspora for a better life. And I grew up in a very optimistic household and at my kitchen table, I heard, like probably many American families do today, talked about a good job. Education was like, you know, that’s what neither of my parents at the time had gone to college. So an education and saving for a home. And I still remember when I was five years old, they bought their first home. I still remember the first night I slept in my room. And I think that’s informed a lot of what I do. And I’ve considered myself very lucky. I’ve had a 30 year plus career in finance and about 20 years ago discovered this, what’s a unique part of finance is housing finance. And I’ve been able to build a career. I’ve had, this will be my fifth role in housing. Each of them I had worked with Fannie Mae. So the one great thing about joining this company, I came in with great admiration for the company for what they do, and I’ve just been very fortunate with each one to have a larger platform to influence more national policy issues.
Murray: When did it first occur to you, having grown up the way you described? When did it first occur to you that you could be CEO of one of the 30 largest companies in the country?
Almodovar: You know, I guess I never thought of “I’m going to be a CEO,” if I’m honest. I always, even from a young age, thought I would be leading something. I didn’t know what. Yes. I mean, I tell you, I tell this funny story, I it’s a bit embarrassing, but at six years old, I had an attache case as much as my book bag. So I think that says it all. And I think it comes really from my parents. I mean, my mom is now deceased. She thought she could do anything. I mean, it was just like this very this can do. And I just think I have inherited that, that I could figure it out.
Murray: You must have had moments along the way coming up through Wall Street finance where you were sitting in a room surrounded by a bunch of guys and where you said to yourself, this system is never going to allow me to get to the top.
Almodovar: That’s not true.
Murray: You never felt it.
Almodovar: You know, it’s the kind of thing where, again, look, in the 1990s there were very few women in finance, in law, in banking, and I never saw that as a as an obstacle. You know, if anything, I was in the room. I worked so darn hard. I wasn’t really trying to figure out the man woman thing. I just did my job and did it well and did project finance for the first ten years. And then I went to J.P. Morgan. I went to a state housing finance agency for three years, then went to J.P. Morgan, had an incredible career there. Were there times when I was the only woman in the room? Absolutely. But I still did my work really well and I think if anything, one of the great things of my position now at my age, you know, I could help change how people think. The face of leadership is changing, and I am just so excited to be part of that. So I look different. But I’m a leader and I really believe, back to your question about me as a leader. I think there’s leaders amongst all of us. So one of my leadership styles and at Fannie Mae, this was a little bit surprising, the first few months, but now the company has embraced it. I talk to the entire organization because as a leader, you want to hear what everyone I mean, we all contribute to the work we do. And it’s probably because I believe there’s a leader amongst all of us. So I never let that get in the way, Alan, being one of the few women.
Lev-Ram: Who are some of the other leaders you’ve worked with and for along the way, you know, male or female, that have really you think, you know, helped kind of paved the way or made a big impact on you?
Almodovar: Yeah, look, I’ve been very fortunate to work with many leaders that I’ve admired. You know, the one I will just say. But Jamie Dimon is probably the best banker that we, I will see in my generation. And this is not me dropping names. I will say he’s someone who genuinely cares about his leaders. Back to your woman question. Jamie doesn’t care if you’re a woman or a man. He just wants a job done and he treats everyone the same. He taught me to be a risk manager. One thing about working at a J.P. Morgan is you don’t realize you’re becoming a risk manager, but he’s very obsessed about end-to-end management, doing the right thing. So that that orientation, I think seeing that leadership and bank that so well run has been quite inspiring. I think back when I first started there were very few women where I was and there was one particular woman who’s now deceased who just like inspired me, like she was like this beautiful, [hard to hear] just this beautiful woman, patrician, and just took me under her wing. And so there were many.
Murray: That’s great. You know, we have a lot of conversations on this podcast about the purpose of business. Yeah. And it gets into debates over, you know, Milton Friedman famously said 50 years ago, the social responsibility is to make a profit for shareholders. We’ve had Jamie Dimon actually led at the Business Roundtable, this whole notion of stakeholder capitalism, redefinition of the purpose of the corporation. You’re in an interesting place because you do have a social mission in your charter. You have shareholders, but you have a clear social mission in your charter. How do you think about that debate? Do you think your model is a better model? That it needs to be infused in other companies? Where where are you on the great stakeholder capitalism debate?
Almodovar: Yeah, no, it’s a great question. You know, at Fannie Mae, as you say, it’s in our charter. So we have to balance mission and safety and soundness and a big part of our business model today is we need to get to that investable return. So return and running the company well is really important. It’s the only way we’re going to build capital right now. What I think is incredible is to me, the innovation at a Fannie Mae happens at the intersection of mission and safety and soundness and profitability, and it’s that tension where we probably do the best work. And, you know, I’m a believer, again, at Fannie Mae, it’s a lot easier because it’s what we do. That our workforce needs to look like the future homeowners. I mean, if I look at who the future homeowners are in this country, there’s a study out there that says by 2040, 90% of homeowners will be people of color. Well, our workforce should look like that, who we partner with, the suppliers we work with. So it’s very much of who we are to us is just how we run our business. To do it well, we have to understand our future homeowner, and that’s what we’re doing.
Murray: Mission and performance.
Almodovar: Mission and performance go hand in hand. You know, serving, I mean, this is true of I think many companies is, you have many stakeholders. You have shareholders for sure. But you’re a citizen of the communities where you work, you’re a citizen to your employees. So I think companies, well-run companies, and I think today most companies, I think, would say they really have to look at the full picture. And by the way, shareholders also expect that—they want good corporate citizens.
Murray: Most of them.
Almodovar: Yes.
Murray: Your shareholders, maybe.
Almodovar: Yes. Yes. No, I think it’s true of you know, I think, look, return is important. And by the way, there’s nothing wrong with that either. Right? So, you know, we are a capitalist society. And I think you can do good and make money at the same time, and the two do not have to be inconsistent.
Lev-Ram: So on that note, I wanted to also bring up the fact we recently had the State of the Union address and housing came up, right? This is a big focus. And while we’ve got plenty of bright spots in the economy, the housing market consistently has been really tough for a lot of people. Again, first time buyers and current homeowners as well because of mortgage rates. As you look out to 2024 and given certain new incentives now that are coming into the fray, like what do you see happening? I mean, is there going to be an easing up here and if so, when? And just what can you tell us about looking out into the future?
Almodovar: Yeah, look, our economists would say that 2024, the economy is still growing at a slower rate. You know, inflation in is coming down. The labor market is still strong. Even the news today, I mean, jobs and there’s still noise in the data, but still strong. We do think that mortgage rates will come down more, settle more in the sixes, low sixes, maybe high fives by 2025. So we do see mortgage rates coming down. So home sales, we expect this year home sales will go up. Last year, home sales were the lowest they’ve been in 30 years. So there’s some good news in the housing market we’re seeing. I mentioned the sentiment that sellers are saying, hmm, maybe this is a good time to sell. We’re seeing new home construction. So we as a country have not built housing at the rate that of new household formation. So new homes are coming online, new built homes. So supply is coming. That helps hopefully will help prices. We think prices will continue to go up, but not at the same pace. So there is some good news. And more and more, one thing that makes me optimistic is, as I mentioned, I used to run a state housing finance agency, I’m finding more mayors and governors are talking about housing because ultimately there’s an issue of supply. We need more supply of housing, you know, depending on which number you look at. Some people say we need 2 million more units of housing. Some people say we need 7 million. The point is we need a lot more housing and supply is ultimately a local issue. It’s a zoning issue. It’s a regulatory building code issue. And the fact that more folks are talking about that makes me optimistic.
Murray: How is AI going to change Fannie Mae?
Almodovar: Yeah, look, so so Fannie Mae has been using artificial intelligence and machine learning for a long time. Like we were the first ones to come up with a loan origination system that’s machine learning, that looks at how it would give an answer. So we’re looking at it very closely. So it’s helping us in our underwriting. So I mentioned rent as being, that’s that’s AI that’s doing that. What’s really exciting to me today is the consumer is changing and the economy. So think of the gig economy. So can we use machine learning and AI to look at bank statements differently to allow non-salary W2 income to count? Right. That would be one example. We’re using AI to understand our climate risk better. Right. Can we, from an informational perspective? Data understanding climate risk is another area. Collateral quality appraisal biases. So we’re using AI to help us look at appraisals differently. How appraisers judge a home and take out biases there. So there are many uses. We are very committed to taking a slower path and doing, you know, we have a governance model, an ethical framework to make sure that we’re doing it transparently. If we use a model that we could explain how it made decisions. We look at privacy and equity. We’re very excited about it.
And obviously one that doesn’t get a lot of hype, but I’m excited about is how we run the company. Think about fraud detection. You know, how do I know when I get a W-2, it’s not a fraudulent W-2. So a big part of AI for a financial institution like a Fannie Mae is fraud detection. Think of cyber. Think of all the anomalies. So looking at anomalies from a fraud perspective, from a cyber perspective. So there are many use cases. And that’s what we’re exploring now because there’s a lot of opportunities. So I’m very excited. One of the books I just read was The Worlds I See by Dr. Fei-Fei Lee.
Murray: Oh cool.
Almodovar: It’s very well done. And it’s good for all of us to understand, like, what is AI? What’s machine learning and how do we bring—her big takeaway is how do we bring a human-centered approach to all this work? So really, it’s a book I recommend, and I know it had an impact on me.
Murray: Fascinating conversation. Priscilla, thank you so much for taking the time to be with us. I hope we’ll see you at Fortune‘s Most Powerful Women event in California. You belong there.
Almodovar: Looking forward to it. Yeah. Thank you.
Lev-Ram: Thank you. Thank you, Priscilla.
Almodovar: Nice to see you.
~ Oh', It Was Simply A "COOP" dash of reality' thrown into the "pot", to counterbalance the daily' COOP "blind-pump" ... LOL ~
... NBD, and the truth is ? IDC anyway' ... I'm going to watch that 64 million (ish) COOP shares out number and the "COOP" retrieval of 36 million' shares' for a bit' ... yesterday's thoughts, were interesting in my opinion ...
just sayin'
AZ
~ LOL' ... Yep, and COOP's New President ?, Mike Weinbach ? ... Could Have Simply Bought 17,000 COOP commons at $5.00 to $7.00 pps (ish) ... NOT' SO VERY LONG AGO' ... LOL' ~
... for just a bit over a 100 thousand' ... ? ... LOL'
Added: ... Yep, ol' cactus is still LOL' ...
just sayin' :)
AZ
New COOP PRESIDENT Mike Weinbach BOUGHT 17,000 common shares for an average price of 71.16, which is ~$1.2 MILLION
He doesn't expect COOP to be only $80+ or $100+ at some point in the future IMO
Filing from 02/14/2024: https://www.sec.gov/Archives/edgar/data/933136/000093313624000010/xslF345X05/wk-form4_1707945315.xml
Footnote 1: The price reported in Column 4 is a weighted average price; the shares were purchased in multiple transactions at prices ranging from $70.78 to $71.3999, inclusive. Reporting Person undertakes to provide to Issuer, any security holder of Issuer, or the staff of the Securities and Exchange Commission, upon request, full information regarding the number of shares purchased at each separate price within the ranges set forth in this footnote.
~ Good Morning XOOM', (Yes', answering XOOM) ... Regarding "COOP" ? I'm substantially more relaxed about all of it', this WMIH / COOP deal these days, ... Yep ever since COOP' rose up into the $50.00 (ish) pps share range, and after ol' cactus had added' WMIH / COOP quite heavily in the single digits pps, ... it was those years 2018 to my profit pull ... that I was concerned' ... WaMu ? the first time ? ... "shame on them" ... then, WMIH / COOP ? that second very heavy purchasing risk ? would have been "shame on me" ... Thankfully ! ! ! ... things worked out and ol' cactus pulled out profits, which covered the original WaMu losses' (it was a lot') ... yay' ... ~
Now a days ?, I just cruise along and wait for what's to come like everyone else, ... with all of my WMI Holding Company Reorganizations releases intact (properly released' uq's and yes, more than willy had, and the P's and K's), ... currently a nominal amount of COOP' still owned... the WMB Directly Owned Bonds, and those beautiful CT's of course' ... ol' cactus placed as many irons in the fire as could be placed' ... LOL ...
Regarding your question ? ... Yes' I believe these most recent thoughts, would be a way to address many forward moving issues' ... and don't forget that I firmly believe that the original released P's, and their releasing owners' ... are still the recipients of the continued Preferred Managing Sub' ... and its current contents ...
that 2018' acquired sub grouping ? ... doesn't get our stuff' ... unless ? something is done' ...
anyhew'
just sayin'
AZ
$COOP price targets===>DEUTSCHE BANK👉$88, Piper Sandler👉$88, UBS👉$86, Wedbush👉$85, KBW👉$81, Barclays👉$80, Compass Point👉$76
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Mr. Cooper Group Inc. (NASDAQ: COOP) provides quality servicing, origination and transaction-based services related principally to single-family residences throughout the United States with operations under its primary brands: Mr. Cooper® and Xome®. Mr. Cooper is one of the largest home loan servicers in the country focused on delivering a variety of servicing and lending products, services and technologies. Xome provides technology and data enhanced solutions to homebuyers, home sellers, real estate agents and mortgage companies.
Upon completion of the merger between WMIH Corp. and Nationstar Mortgage Holdings Inc. on July 31, 2018, WMIH became the parent company of the Nationstar Mortgage Holdings Inc. family including Mr. Cooper (Nationstar Mortgage LLC, d/b/a Mr. Cooper), Xome and Champion Mortgage (Nationstar Mortgage LLC d/b/a Champion).
As of October 10, 2018, Mr. Cooper Group Inc. is the new name of WMIH Corp. On July 31, 2018, WMIH, now Mr. Cooper Group, became the parent company of the Nationstar Mortgage Holdings Inc. family including Mr. Cooper (Nationstar Mortgage LLC, d/b/a Mr. Cooper) and Xome.
As early as late 2006, WaMu would begin to become a victim of what would eventually become the worst recession in US history since the Great Depression of 1929. WaMu's aggressive business strategy would begin to unfold throughout the end of 2006 and become increasingly disastrous through 2007. As housing rates were at all time highs before the recession began, WaMu would use its considerable leverage and assets to make large amounts of loans in both subprime mortgages and subprime credit cards. The banking division of WaMu at one point before the end of 2007 had nearly 336 stand-alone branch buildings where various types of home loans were processed and approved. WaMu would eventually over leverage themselves due to the high number of Adjustable Rate Mortgages (ARMs). As the US economy slowed down, the number of home loan defaults began to rise in quick succession. This coupled with the falling home prices throughout most of the US meant that even with foreclosures and the properties back in the hands of the company, they were unable to sell them back into the market, or were not able to derive enough revenue from the sale to cover the loan that was made on them. In the mean time, the credit card division was also seeing a surge in the number of late and non payments being made.
By September of 2008, WaMu's stock price had fallen to $2 from its previous highs of around $50 just two years earlier. Amid strong voices from the shareholders, then company CEO Kerry Killinger was dismissed by the company board. In the meantime, the company went looking for a buyer for part of its banking division. WaMu had been unsuccessful in finding an appropriate buy until its seizure by the FDIC. Overnight the companies banking division was bought by JP Morgan Chase in a secret deal brokered by the FDIC for 1.9 billion dollars. Washington Mutual Inc. has reorganized to Washington Mutual Holding Inc. WITH SHAREHOLDERS INTACT
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