Marketing Management Analysis: Fannie, Freddie Spend $640,000 Says Wall Street Journal

Fannie Mae and Freddie Mac are a recognized leading mortgage financing company a dominate force in the U.S market”, (Zibel, 2011).  Five years ago in December 1,, 2011 edition of the Wall Street Journal announced that Fannie Mae and Freddie Mac spent more than a half a million dollars to sponsor a single mortgage conference.  Despite their notoriety Fannie Mae and Freddie Mac continued to struggle financially. It is primarily observed primarily in new loans from mortgage lenders. This includes substantial loss in mortgaged homes, home foreclosures, and few home purchases in a slow economy.

Spending Borrowed Money

In 2008, Fannie Mae and Freddie Mac acquired funds from the federal government that amounted to “more than $151 billion”, (Zibel, 2011). Since then the mortgage group was placed under the care of government supervision according to the Federal Housing Finance Agency. To responsibilities of the agencies is “to make sure that Fannie and Freddie are run responsibly and in a way that minimizes taxpayer losses”, (Zibel, 2011). Even still the industry managed to spend almost three quarters of a million on a single mortgage conference. This includes hiring more than 100 staff to cover the event in addition to $342,000 on food, hotel, and travel, $74,000 on dinner, $140,000 to sponsor, and $68,000 on registration fees.

A Smart Marketing Plan or a Waste of Government Money

Freddie and Fannie spokesperson admitted the mortgage industry was able to conduct 200 meetings with mortgage investors over the course of two days. Furthermore, by hosting and sponsoring the conference Fannie and Freddie were able to market their brand. The was used as an opportunity to have face to face meetings, provide quality information to lenders, and receive additional customers needed to remain ahead. With this conference Fannie and Freddie applied marketing product management. This was done through promotion and a stable platform to justify price and execute their marketing strategy. Conference platform allowed the industry to showcase improvements and adjustments to the mortgage community. Fannie and Freddie displayed product development in the real estate market through home construction and new property zones throughout the country. Efforts taken to improve market value and promote home sales were also introduced to mortgage lenders. It encouraged sales and channel their marketing program in one venue.

Fannie and Freddie monopolize the mortgage industry. This is seen in their hold in the market of “70% of new loans from mortgage lenders”, (Zibel, 2011). Due to the mortgage industry’s loss in revenue from the economic recession, government funds should be spent in an efficient manner like lowering sponsor amounts or limiting dinner events to just one versus several. It begs to question the efficiency and practical application of Fannie and Freddies’ money and marketing management. As a dominating mortgage industry it is not realistic to spend large amounts of money during economic stress. As they already hold 70% of all U.S mortgages, it may be inappropriate to expand. The attempt to dominate upwards to 75% or 80% of the market is over-reaching. An effective marketing strategy involves maximizing revenue and profits. However, if Fannie and Freddie did receive additional lenders due to the conference, it is doubtful that it was enough to cover the expense of the conference itself.

Bad Publicity for Fannie and Freddie

Fannie and Freddie may have misjudged their analysis of the company. They did not foresee the relationship between cost structure and position of competitiveness. As a dominating entity it was unnecessary to hold a weekend conference costing more than half a million. The conferences alone cannot generate additional revenue needed to regain its losses. It can only be achieved by additional commercialization and opening up their customer target to small real estate agencies, new business, and rural real estate zones. By implementing these market management strategies, they would not be under government scrutiny. This is bad publicity for the company. As taxpayers continue to stretch the dollar beyond its limits, the loss of jobs, and high mortgage rates, individuals will begin to see Fannie and Freddie as another overbearing corporate industry that is full of distrustful misgivings.

 

 

Bibliography:

Zibel, A. (2011, December 01). Fannie, freddie spend $640,000 on conference. Wall Street Journal, p. A5.

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About Russia Robinson

I am an independent freelance writer and free thinker. I strive to use my writing talents to benefit the greater good of society, one word, one sentence, one page at a time. Originally from Richmond, California I attended San Francisco State University receiving a BA in English Creative Writing and American Literature in 2004. After this I attended post graduate studies in 2008 at Georgia’s Kennesaw State University in Technical Writing. With an academic background in English, I have spent more than 10 years’ helping young people succeed. This can be seen in my career background in education and mental health. I am a certifiable Language Arts teacher for the state of Georgia. I also worked in social services including juvenile mental health treatment services and counseling. As a result, I understand the diversity of problems people face in their everyday lives. With words put together like so, I promote equality and a healthy society for all people regardless of individual differences. Conducting research, writing articles, essays, and blogging, I push to educate others about various issues that affect people. I also do this creatively through short stories, poems, pictures, and a novel in progress. My hobbies and interest are reading and learning. I enjoy all things art and all things nature. From camping and astronomy to photography and cooking, I enjoy sighting seeing and socializing just as much as I enjoy curling in bed with a good book or binge watching TV.
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