CUYAHOGA COUNTY, NUMEROUS ORGANIZATIONS KICK OFF COUNTYWIDE EFFORT TO PREVENT FORECLOSURES, PREDATORY LENDING

Homeowners Facing Mortgage Trouble Have A New Ally

Cleveland, OH – At a press conference here today, a coalition of 43 private and public organizations, including the City of Cleveland, the Cuyahoga County Treasurer's Office, the Cuyahoga County Board of Commissioners and Freddie Mac (NYSE: FRE), officially kicked-off the expansion to Cuyahoga County of the Don't Borrow Trouble® campaign to combat predatory lending, and the addition of a new foreclosure prevention education component.

Cuyahoga County's Foreclosure Prevention Program is now part of the Don't Borrow Trouble campaign to make counseling help available to the thousands of homeowners who need advice about their home loans, are in danger of defaulting on their payments or are facing foreclosure. Freddie Mac has brought the Don't Borrow Trouble® campaign to 40 locations across the country. "Consumer education is key in combating predatory lending and helping to prevent foreclosures," said Cleveland Mayor Frank G. Jackson. "The City of Cleveland has been at the forefront of the fight against predatory lending and welcomes Don't Borrow Trouble as another tool that will help the residents of Greater Cleveland."

Cuyahoga County had an estimated 10,000 foreclosures in 2005, four times more than in 1998, and among the highest in the nation. The goal of the expanded Don't Borrow Trouble campaign is to decrease inappropriate mortgage lending and mortgage foreclosures through outreach, education, counseling, legal assistance and advocacy. Residents who need help or have questions about foreclosure and lending issues are urged to call the campaign helpline: 2-1-1. It's also the United Way's ‘First Call for Help' Line. Trained 211 referral specialists will direct callers to one of nine local non-profit agencies that can assist them with their specific problem.

The counseling will cover the whole spectrum of issues that lead to foreclosure, from budgeting advice to refinance counseling, to helping homeowners in default work out payment plans with lenders. Counselors also will show current and prospective borrowers how to make good financial decisions, repair credit reports, refrain from making poor refinancing deals on existing homes, and identify loan products that are most likely to lead to mortgage defaults and foreclosure.

"Foreclosure on a family home is the American dream lost," said Jimmy Dimora, President of the Board of Commissioners. "We commend Freddie Mac and our coalition partners for understanding the critical nature of this problem while taking steps to help the citizens of Cuyahoga County. Foreclosures uproot families, destroy credit, and lock individuals out of the housing market while destabilizing neighborhoods and lowering property values. Predatory lending can only be curbed – and eventually eliminated – through education and consumer counseling. Cuyahoga County needs public awareness to this insidious and menacing practice – and we cannot rest until we eliminate predatory lenders."

"We welcome the Don't Borrow Trouble campaign to our County," said Commissioner Peter Lawson Jones. "The most effective way to combat predatory lending is by keeping consumers from entering into such loans. Don't Borrow Trouble has proven to be immensely successful in helping borrowers make smart decisions."

"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 Craig Nickerson, vice president of Expanding Markets for 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 organizations should be commended for banding together and combining their resources to educate consumers on the perils of predatory lending practices."

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.

The Cleveland Don't Borrow Trouble campaign began in 2001. The County's Foreclosure Prevention Program began in fall 2005. 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.

Cuyahoga County was established on June 7, 1807 by State Legislature and was named for a Native American word that means “crooked.” It is the largest county seat of the 88 counties that comprise the State of Ohio. According to recent census data, Cuyahoga County has a population of more than 1.3 million residents and is considered one of the region’s top 10 employers with more than 10,000 full-time equivalent employees. The county is comprised of 38 cities, 19 villages and two townships. The Cuyahoga County Board of Commissioners manages an operating budget of nearly $1.4 billion yearly. To find out about the programs and services available to residents and the local business community visit www.cuyahogacounty.us

Freddie Mac is a stockholder-owned company established by Congress in 1970 to support homeownership and rental housing. Freddie Mac fulfills its mission by purchasing residential mortgages and mortgage-related securities, which it finances primarily by issuing mortgage-related 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 four million renters in America.

DON'T BORROW TROUBLE® CUYAHOGA COUNTY
PARTICIPATING ORGANIZATIONS

Tips For Avoiding Borrowing Pitfalls
Source: Freddie Mac

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 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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