Fannie Mae (the Federal National Mortgage Association) is a large, quazi-government corporation whose purpose is to make sure there is adequate funding for consumer mortgages. It usually does this by buying mortgages from lenders, freeing the lenders to go out and lend money to someone else (“making a liquid market in mortgage backed securities”). In the process, they are able to use economic means to stifle predatory and discriminatory lending practices. Fannie Mae also happens to make a lot of money doing this ($5.25B). Enough money that they can pay some $20M to the three-letter types and still send out an annual dividend of $1.56 to holders of their 978 million shares. That’s over $1.5 billion in dividends per year. The dividend alone is more than 4300 times the maximum conventional mortgage. FNMA is big. Some would argue it is too big to be allowed to fail.
But that is not today’s topic; instead I would like to direct your attention to their advertising. You wouldn’t think there’d be a lot of advertising, since after all they deal primarily with banks and mortgage companies. They actually have a surprising amount of advertising. Some of it is occasionally found on business and news oriented media. Some of it is in the form of sponsorship of organizations such as NPR. All of it is designed to make you feel all warm and fuzzy about home ownership.
All these are quotes from their website: “The American Dream of home ownership.” “Because having a safe place to call home strengthens families, communities, and our nation as a whole. ” “Revitalizing neighborhoods and creating affordable housing opportunities for over 20 years.” “A home of our own is a dream come true and symbolizes who we are.” “Homeownership has the power to green-line both neighborhoods and nest eggs.” A past ad even suggests that homeownership is directly linked to better schools.
Implied is the idea that owning real estate will magically make life happy. A house should be the foundation of your finances! You are nobody unless you own a house! Do they really think you are stupid enough to think nobody owns houses in crime-ridden, run-down communities? Are they saying that apartment dwellers are somehow not holding their own in American society? That renters by default do not live in safe places or strong neighborhoods? That anybody with stable finances should surely own, not rent, their residence?
As someone with experience in property management, I find these implications insulting, as should you. There are people who own houses in bad neighborhoods, and people whose houses are a drain on the finances, people for whom this particular American Dream is a nightmare. There are people who rent houses and apartments in good neighborhoods, and people who rent for a variety of reasons, few of which are monetary.
FNMA does some good things. They do not need to tug on Joe Average’s heartstrings to make the mortgage market liquid. Should there turn out to be a “housing bubble,” such sentimental claptrap must be accorded a fair share of the blame. They should lose these ads now.