DON'T BORROW TROUBLE® FAIRBANKS, ALASKA CAMPAIGN LAUNCHED TO HELP CONSUMERS AVOID PREDATORY LENDING

Fairbanks, AK – At a Chamber of Commerce luncheon here today, a coalition of private and public organizations headed by Fairbanks Neighborhood Housing Services (FNHS) and Freddie Mac (NYSE: FRE), are kicking off the Don't Borrow Trouble® campaign in Fairbanks and interior Alaska. This public education campaign is aimed at preventing predatory lending practices and protecting home ownership.

Other members of the kickoff taskforce responsible for this event include the Greater Fairbanks Board of Realtors, the City of Fairbanks, the United States Department of Agriculture Rural Development, Alaska Legal Services Corporation, and Consumer Credit Counseling Service of Alaska, Interior Regional Housing Authority, North Star Council on Aging, and the U.S. Department of Housing and Urban Development. Please see the end of this release for a complete list of organizations involved with this education campaign.

The coalition urges consumers to call the Don't Borrow Trouble help line – at 1-888-925-2521. This hotline is staffed by trained professionals who can offer free assistance to individuals seeking information about purchasing a home, refinancing, consolidating debt, taking out a home-equity loan, and mortgage foreclosure prevention. Individuals can also be referred to appropriate legal or financial experts.

The Don't Borrow Trouble Fairbanks campaign also uses brochures, a website at www.muni.org/dontborrowtroublealaska, radio and television public service announcements and workshops throughout the interior to educate consumers who are most vulnerable to predatory lending practices, including the elderly, minorities and low- to 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.

"Buying a home is one of the most significant investments a family can make," said Senator Ted Stevens (R-Alaska). "The Don't Borrow Trouble Program is helping us ensure Alaska's families have the information they need to avoid scams and pressure tactics when making this investment."

According to City of Fairbanks Mayor Steve Thompson, "Home Ownership is a dream of our citizens. Through education, this campaign ensures that owner's equity will not be stolen by scam artists. It also helps protect our military community by educating them about the perils of unfair lending practices. The long-term effects will be economic stability for our City."

Laura Burke, executive director of Fairbanks Neighborhood Housing, said, "Predatory lending often shatters the dream of homeownership and places families at risk for homelessness. It threatens the accumulation of wealth, and affects the stability of entire neighborhoods. 'Don't Borrow Trouble®' Fairbanks helps keep the dream secure for both current and future homeowners."

"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, 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."

The mission of Alaska Legal Services Corporation is "Access to justice for Alaskans in need." Fighting against predatory lenders who would steal the homes, paychecks, and other property from Alaskans is an important part of its mission.

Sharon Camarata, director of housing at Consumer Credit Counseling Services (CCCS) of Alaska, said, "CCCS is an unbiased third party not for profit agency that works with homeowners to prevent or assist them with delinquent housing issues. When appropriate, we refer our clients to the relevant regulatory agencies to intervene in cases of scams, fraud and practices that involve predatory lending concerning Alaskans. Our goal is to educate the public to avoid predatory lending by learning how to recognize it before it occurs."

Stacy Risner said, "One of the major objectives of the Greater Fairbanks Board of REALTORS® is to help safeguard and advance the interests for real estate owners. Participating in the Don't Borrow Trouble Campaign is an excellent way for us to meet this objective. By educating consumers on the dangers and pitfalls of predatory lending practices, we are truly helping to safeguard the interests of home ownership."

"Through the Don't Borrow Trouble Campaign, USDA Rural Development, which offers low income families subsidized mortgage loans, will assist in educating the public on predatory lending practices to allow them to make sound financial decisions that will enhance their lives rather than put themselves into a more unstable financial condition," said Loan Specialist Kim Wood.

"Seniors are a prime target of predatory lenders. Informing and educating seniors, as well as other vulnerable populations, is essential in the Fairbanks Community," said Lou Gross, executive director, North Star Council on Aging.

According to the Division of Banking and Securities, they continue their "participation in this and other consumer protection programs to provide all Alaskans with the knowledge and resources to prevent them from becoming a victim of consumer fraud."

Predatory lending practices strip equity away from homeowners by 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 40 locations across the country, and has received more than 100,000 inquiries to the Campaign's help line.

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.

Statewide partners of the "Don't Borrow Trouble®" campaign:

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.

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