Fannie Mae lodges lawsuit against home warranty providers

Fannie Mae is suing four home warranty providers, accusing them of "willful misuse" of its trademarked name for their own marketing in ways that intentionally deceived consumers.

In documents filed in federal court of the Northern District of Ohio, attorneys representing the government-sponsored enterprise named Warranty Global Group, based in Addison, Texas, along with three associated companies as defendants. 

Fannie Mae, which was referred to under its official name, Federal National Mortgage Association, made its case that defendants' unauthorized use of its Fannie Mae trademark in marketing correspondence was harmful to its reputation and that it had never authorized the warranty companies to contact consumers. 

"Defendants prominently displayed the 'FANNIE MAE' mark in solicitations and marketing materials, creating a false impression of affiliation, sponsorship or endorsement by Fannie Mae," the lawsuit said. 

Listed as defendants alongside Warranty Global were three associated contract providers: US Home, Superior Home and Oasis Home. Although their headquarters are located in different states, the filing noted that all four companies shared personnel including consumer-facing program managers responsible for warranty sales. 

Since mid-2023, when letters from the companies began going out, the GSE said it had received multiple inquiries from confused consumers, who believed it was behind the correspondence and backed the home warranty businesses. 

"Their conduct has caused actual consumer confusion, has diluted and tarnished the 'FANNIE MAE' mark and has resulted in significant harm to Fannie Mae's goodwill and reputation," the document continued. 

The defendants provide warranties for essential home appliances, including water heaters, electrical units and air conditioning systems.  

Warranty Global had not responded to a National Mortgage News inquiry prior to article publication.

Details of Fannie Mae's claims against defendants

In the lawsuit, Fannie Mae claimed the marketing practices of the four home warranty providers were deliberately designed in a way to push customers toward contract purchases under false pretenses. 

Solicitations sent by the companies indicated that the homeowner's home warranty was set to expire and immediate renewal was required for continuation of coverage. Attorney-provided court exhibits showed letters addressed to homeowners marked "time sensitive" or requiring immediate responses for properties secured by 'FANNIE MAE MORTGAGE.'" 

If customers responded, employees kept up the false narrative and misrepresented requirements in order for them to remain compliant with their mortgages' terms and conditions, Fannie Mae said. 

The enterprise does not require loans secured by homes to carry warranties, it emphasized. Fannie Mae also would not solicit individual property owners with such product offerings nor require loan servicers to do the same, it said. 

While a monetary amount was not specified, Fannie Mae is requesting the court to award damages comprising "all profits unlawfully derived" from any of the trademark infringements. It also asked for judgment ordering the defendants to deliver to Fannie Mae all deceptive marketing materials, whether in hard-copy or electronic form, that were in their possession and control for destruction. 

If ruled in the plaintiff's favor, the home warranty companies would also be prohibited from using the Fannie Mae name or alluding that their services are backed by the enterprise.