Fannie Mae & Freddie Mac: What's Next?

By Kelly Carr and Carol Legg
September 9, 2008 07:03 PM

After a major story breaks and media outlets have logged long hours to capture every bit of available information for readers, reporters can take a moment to breathe. It’s in that period, as the dust settles in the weeks and months that follow a mega story, new creative ideas are born.

In the case of Fannie Mae and Freddie Mac, the media immediately jumped on obvious angles – the credit changes, the possible fluctuation of mortgage rates and primers on the takeover. But it’s important to step back for a moment from a big story and figure out what angles must be covered in the coming days and what other opportunities exist to tell the complete story.

The news of Fannie Mae and Freddie Mac is no exception. Wrapped inside the announcement is a sea of local, human interest and international stories. And there’s great opportunity for multimedia, interactivity and higher page views.

Pamela Luecke, who teaches business journalism at Washington and Lee University, says the takeover provides the perfect “teaching moment.”She urges journalists to not only consider the sophisticated business reader who understands the inner workings of Fannie Mae and Freddie Mac, but also to write for the average investor or homeowner.

Try taking a historical perspective. Explain to readers why Fannie Mae was created in the first place. Or follow the cash trail not only to CEO severance packages, but as a way to explain where exactly taxpayer money will land.

“This is an opportunity to write and explain the story and concepts to average citizens,” Luecke said. “A big story does tend to attract more people to the biz pages and front pages. This is a time when business journalists can help get important concepts across to people who aren’t normally reading their pages. It’s an opportunity to write for people who don’t already understand it.”

This story also offers a key chance to embrace nontraditional storytelling methods, she said. Luecke suggests glossaries, interactive narrative storytelling techniques and even turning the mortgage crisis into a graphical story through a comic strip. Think outside the box. American Public Media’s Marketplace offers video games, like one where readers try to balance the federal budget.

“Anytime there is a big story like this it galvanizes public attention,” Luecke said. “The readers, for a brief moment in time, are motivated to learn about it.”

Take advantage of this important business story by narrowing in the focus and finding stories that relate to your specific coverage area. To keep you going, here are some key topics to pay attention to. 

Tracking the Mortgage Situation
Experts say consumers should expect lower interest rates, lower fees and more relaxed mortgage terms as a result of the bailout. In theory, credit-worthy consumers should find it easier to get loans and some existing homeowners may be able to refinance at lower rates. The media can easily put this theory to the test and see if it works in the real world.

Reporters can show if the government's takeover is working as intended by interviewing members of their community. Seek out the groups listed below and follow their progress in the loan application/refinance process. The experiences of these individuals will put a more personalized spin on the issue and help measure the takeover's overall effectiveness in helping home buyers secure financing.
    - Credit-worthy consumers previously turned-down for loans
    - First-time home buyers
    - Buyers looking for investment properties or their second, third home
    - Existing homeowners trying to refinance for the first time
    - Existing homeowners who were unable to refinance before

Impact on Investments
Journalists can further personalize coverage of the bailout by helping individual investors understand the impact on their portfolio. While the stock market got an initial boost from takeover news, the excitement appeared to fizzle the next day.

But only reporting the ups and downs is insufficient. Break down the big story for the everyday (and perhaps not-so-savvy) investor by asking the following questions:
    - Which stocks or sectors will benefit from the government's move and which may be adversely affected?   
    - How should the smaller-scale investor restructure their IRA in light of the government's move?
    - How is the move impacting equities versus fixed income? Should the investor reallocate their portfolio?
    - What are the short-run and long-run investment strategies for the bailout?
    - Is now a good time to consider international investments?

Educating the Consumer
Some argue that in the most recent boom-to-bust cycle, the media did not do their job in educating consumers. This time, the media can serve as somewhat of a backup for consumers who fall victim to ignorance or even fraud.

This is a great place for human-interest stories as well as the use of multimedia. Use polls to determine what knowledge your community lacks. While the housing and credit markets have dominated the news in the recent years, many consumers still struggle with what exactly is going on. Consumers may still need help in understanding the following:  
    - What makes one credit-worthy?
    - What impacts/changes a credit score?
    - What is the difference between loans i.e.  an adjustable rate mortgage versus a fixed-rate mortgage?
    - How to avoid getting "upside-down" on your house
    - Reading the fine print before signing the loan documents (pre-payment penalties, etc.)
    - What led to the most recent housing crisis?
    - What are the signs of mortgage fraud?

Following Real Estate Trends and Data
Most media outlets report housing figures as they become available. These figures, however, have to be put into perspective; otherwise they become useless. Make these figures local and personalized. This is another place for multimedia in the form of simple graphs, charts, timelines, etc. But reporting just the figures is not enough. Journalists should seek the help of experts to figure out exactly what caused the change in figures, or lack of it.

The Bailout Does Not Exist in a Vacuum
Consumers are currently facing a multitude of issues including inflation, rising unemployment, low wages and, according to some, a looming recession. As most critics of the government's bailout have said, the plan may not be a cure all. Journalists must therefore refrain from offering false hope.

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Copyright © 2008 Donald W. Reynolds National Center for Business Journalism