Zions' latest deal will boost its multifamily business

• Key insight: Zions Bancorp. has reached an agreement to buy Basis Investment Group's Fannie Mae and Freddie Mac lines of business.
  
• What's at stake: The ability to underwrite and close Fannie and Freddie loans will position Zions, which operates in 11 western states including California, to take advantage of the need for more multifamily lenders in Southern California, one analyst said.
  
• Forward look: The deal must be approved by Fannie Mae and Freddie Mac.

Zions Bancorp.'s multifamily lending business is poised for more growth after the regional bank announced a deal that will allow it to offer Fannie Mae and Freddie Mac loans to its commercial real estate customers.

The $89 billion-asset company said Monday that it plans to acquire the agency lending business of Basis Multifamily Finance I, a subsidiary of the New York-based commercial real estate investor Basis Investment Group. Financial terms were not disclosed.

The proposed deal, which includes personnel, access to Fannie Mae and Freddie Mac lending programs and all associated mortgage servicing rights, comes on the heels of a similar transaction involving Fifth Third Bancorp. Fifth Third said in December that it would buy Mechanics Bank's Fannie Mae business as a way to serve more multifamily developers and investors.

If approved by Fannie and Freddie, Zions' pending transaction will put it on a small list of U.S. banks that are permitted to underwrite and close Fannie and Freddie multifamily loans on behalf of the agencies. There are currently about eight large and regional banks authorized to close Fannie loans, and seven that can close Freddie loans, according to the agencies' websites, each of which also lists more than a dozen authorized nonbanks.

"There are a limited number of banks and nonbank lenders that have access to these programs … and typically you need an entry point," Michael MacDonald, head of Zions' capital markets business, told American Banker. To be approved would be "a distinct competitive advantage."

The deal will also open the door for Salt Lake City-based Zions to do more multifamily lending in Southern California, one of the largest multifamily markets in the country, said Timothy Coffey, an analyst at Brean Capital. Zions operates seven bank brands in 11 states, including California.

Three lenders that are no longer operating independently — First Republic Bancorp, much of which was acquired by JPMorganChase after it failed in 2023; Pacific Premier Bancorp, which was acquired last year by Columbia Banking System; and HomeStreet Bank, which was bought last year by Mechanics — were active multifamily lenders in Southern California, he said.

"I don't think it's a coincidence that we're starting to see these licenses move around when there's been such a void in multifamily lenders" in certain markets, Coffey told American Banker.

Zions did not say how long it may take for the deal to close or how many Basis employees it expects to bring on board. It also did not provide details about the size of either the Fannie or Freddie portfolio.

The transaction is subject to certain closing conditions and third-party approvals, including approval by Fannie Mae and Freddie Mac, Zions said.

Zions' interest in gaining access to Fannie and Freddie products is part of its strategy to keep building out its capital markets business, MacDonald said. Since that business launched in 2020, the bank has added different products and capabilities, such as investment banking, sales and trading, power and project financing, and real estate capital markets.

The point is to be able serve customers as various financial needs arise, he said.

Zions' desire to do more multifamily lending makes it a bit of an outlier in the industry, as some lenders backed away from the sector during the rising interest-rate environment of 2022 and 2023.

Zions' multifamily book has grown from $3.6 billion in 2023 to $4 billion in December 2025, the bank has said. Multifamily loans make up about 30% of its commercial real estate portfolio.

Entry into the Fannie and Freddie lender programs offers a shared-risk opportunity. For the Fannie program, banks share one-third of the credit risk, while Fannie assumes the remaining two-thirds and guarantees the loan, according to the agency's website.

Current participating banks in Fannie's program include JPMorganChase, Citi, Wells Fargo, Capital One Financial, PNC Financial Services Group, KeyCorp, M&T Bank and Regions Financial.

Fifth Third is set to join the group if its acquisition of Mechanics Bank's license is finalized. That deal is expected to occur by the second quarter of this year, Mechanics said in its latest quarterly filing. Fifth Third has agreed to pay about $130 million for the rights, the filing said.

Mechanics, which is based in Walnut Creek, California, acquired its license when it bought Seattle-based HomeStreet in 2025.

Banks in Freddie Mac's program include JPMorgan, Wells, Key, M&T, Regions, PNC and Capital One.

More banks may try to get access to the agencies' programs, especially since it's a way to optimize capital, Coffey predicted.

"Quite frankly, I'm surprised that more banks haven't gotten into this," he said.