DON’T BORROW TROUBLE^SM EDUCATION CAMPAIGN TO PREVENT PREDATORY LENDING LAUNCHED IN SUBURBAN PHILADELPHIA

Congressman Weldon Encourages Citizens to Call the Campaign’s Hotline

Norristown, PA – At a press conference here today, a coalition of private and public organizations including Community Impact Legal Services, Freddie Mac (NYSE: FRE), and the Counties of Bucks, Chester, Delaware and Montgomery launched a major public education campaign aimed at preventing predatory lending in suburban Philadelphia. The new campaign features a special hotline where trained counselors will provide free civil legal advice for purchasing a home, refinancing, consolidating debt, taking out a home-equity loan, and mortgage foreclosure prevention, as well as refer consumers to appropriate legal or financial experts.

The Suburban Philadelphia Don’t Borrow Trouble^SM Campaign is a multimedia strategy of brochures, a Web site and radio public service announcements all aimed at consumers who are most vulnerable to predatory lending – the elderly, minorities and low-moderate-income individuals. By combining advertising and face-to-face consumer education and housing counseling, the Campaign helps consumers avoid abusive lending practices, such as exorbitant interest rates, excessive fees and pressuring tactics.

The campaign encourages consumers to call the Don’t Borrow Trouble help line at 888-275-8843. It is hoped that individuals will use these resources for advice before they get into financial difficulty when purchasing a home, refinancing, consolidating debt, or taking out a home equity loan. The help line is also a resource for those who find themselves currently in trouble with foreclosure.

"Congratulations to Freddie Mac and their partners for offering a program to my constituents that will help them achieve the American dream of owning a home," said Congressman Curt Weldon (R-PA). "With opportunities for purchasing a home at an all-time high, it is important to remove as many barriers to successful home ownership as possible. This campaign will assist and educate Pennsylvanians in learning the essentials of homebuying and protect them against unscrupulous lending practices."

"I am excited to be a part of this national awareness effort," said Chester County Commissioner Andrew Dinniman. "The Don’t Borrow Trouble Campaign will continue to move Pennsylvania forward in the fight against predatory lending. The help line will provide an invaluable service to residents as they strive towards homeownership."

"Predatory lending practices attack the heart of our communities. These practices can strip away home equity and trap unwary borrowers in a dismal cycle that ultimately replaces homeownership with foreclosure," said Michael Innis-Thompson, director of Housing & Community Investment at Freddie Mac. "Don’t Borrow Trouble is a proven method to help stop predatory lending and to keep families in their homes, build wealth and strengthen communities. These four counties should be commended for banding together and combining their resources to educate consumers on the perils of predatory lending practices."

Organizations participating in this campaign are: Community Impact Legal Services, Freddie Mac, Bucks County Department of Consumer Protection, Chester County Bar Association, Montgomery County Department of Housing and Community Development, Chester County Department of Community Development, Delaware County Office of Housing and Community Development, Fair Housing Council of Suburban Philadelphia, Montgomery County Fair Housing Council, Pennsylvania Human Relations Commission, U.S. Department of Housing and Urban Development, Consumer Credit Counseling of Delaware County, Housing Partnership of Chester County, Housing Alliance of Southern Chester County, CCIP-Delaware County, and Legal Aid of Southeastern Pennsylvania.

"When suburban Philadelphia homeowners become targets of predatory lenders they risk losing their most valued asset, their home," said Carolyn Johnson, executive director, Community Impact Legal Services. "The first line of defense against predatory lenders is a public that is educated and aware."

Some Signs of Predatory Lending

Predatory lending practices strip equity away from homeowners. A few examples are repeatedly refinancing a loan within a short period of time and charging high points and fees with each refinance; packing a loan with single premium credit insurance products like credit life insurance, and not adequately disclosing the inclusion, cost or any additional fees associated with the insurance; or charging excessive rates and fees to a borrower who qualifies for lower rates and fees.

Pioneered in Boston by Mayor Thomas M. Menino and the Massachusetts Community and Banking Council, Freddie Mac is the principal sponsor of Don’t Borrow Trouble’s expansion throughout the United States. Freddie Mac has brought the campaign to more than 36 locations, and has received more than 50,000 inquiries to the Campaign’s help line.

About Community Impact Legal Services
Large group or systemic representation is an important legal tool to better the lives of low-income communities, which typically lack the financial resources and organizing experience required to effect positive change in firmly entrenched economic, government or social systems. With this in mind, Community Impact Legal Services (CILS) has emerged as a regional leader in providing legal advocacy, education and group representation focused on issues that disproportionately affect low-income households in Southeastern Pennsylvania, including bankruptcy and consumer fraud, public housing evictions, affordable housing development, and predatory lending/fair housing.

Based in Coatesville and the City of Chester and serving the wider Bucks, Chester, Delaware and Montgomery County region, CILS was formed as a new entity in 2001 following the merger of the four previous legal services providers in each county. CILS was formed to specifically address systemic legal advocacy and class representation concerns, and is structured so as to be free from federal funding restrictions against such efforts. Working jointly with other pro bono legal aid and social service providers, CILS offers a two-pronged approach, which involves providing class representation where legal intervention is required, and teaching disenfranchised populations to advocate for change on their own behalf, through organizing assistance provided to tenants’ councils and other grassroots community groups.

About Freddie Mac
Freddie Mac is a stockholder-owned company established by Congress in 1970 to support homeownership and rental housing. Freddie Mac purchases single-family and multifamily residential mortgages and mortgage-related securities, which it finances primarily by issuing mortgage passthrough securities and debt instruments in the capital markets. Over the years, Freddie Mac has made home possible for one in six homebuyers and more than two million renters in America.

Say NO to "easy money." Borrowers should beware if someone claims "credit problems won't affect the interest rate." Avoid solicitations for loans that sound too good to be true. If it sounds too good to be true, it probably is. If a solicitation is really interesting, get it in writing!

1. Shop around. Borrowers should talk to several lenders to find the best loan for which they qualify. A loan product or lending practice may not seem predatory until compared with a similar loan product offered by other lenders.

2. Understand the loan terms. Borrowers should compare loan terms from different lenders. Understand the best loan terms available in the marketplace and compare the APR (annual percentage rate) of loans from different lenders. The APR takes into account both the interest rate and the points and fees of the loan. A nonprofit housing counselor or a lawyer can review the information with a borrower

3. Find out about prepayment penalties. Borrowers should know if the loan offered to them has a prepayment penalty. Prepayment penalty should be a choice, not a requirement.

4. Make sure documents are correct. Be cautious of someone who offers to falsify a borrower's income information to qualify for a loan. Borrowers should never falsify information or sign documents that they know to be false.

5. Make sure documents are complete. A borrower should not sign documents that have incorrect dates or blank fields. Be wary of promises that a lender will "fix it later" or "fill it in later."

6. Ask about additional fees. Borrowers should question any items they didn't ask for. Borrowers should also beware if they are told that single premium credit insurance is required get a loan, or that purchasing it will help loan approval. Review every fee and compare different lenders' fees to ensure the most competitive loan terms.

7. Understand the total package. Ask for written estimates that include all points and fees. The situation may not seem abusive until when everyone gets to the closing table. If any fees or charges differ from what was previously disclosed, delay the closing until all terms of the loan are clearly understood.

8. Work with credit counselors. A borrower should get all the facts before deciding to combine credit card or other debts into a home loan. Beware of scam credit counseling/ credit consolidation agencies – unfortunately, not all credit counseling agencies are acting in your best interests. Talk to a community based consumer credit counseling agency or housing counselor before signing the loan documents.

9. Protect home equity. If borrowers are taking equity out of their property, they should take out the minimum amount needed. The equity in a home is a source of wealth, which builds up slowly over time.

10. If you’re not sure, don't sign! Get advice first! Talk to a community based consumer credit counseling agency or housing counselor.

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