CONGRESSMAN RAUL GRIJALVA, FREDDIE MAC AND LOCAL LEADERS TEAM UP TO LAUNCH DON'T BORROW TROUBLE® PIMA COUNTY CAMPAIGN TO HELP CONSUMERS AVOID PREDATORY LENDING

Tucson, AZ – Because the best defense against predatory lending is education, Congressman Raúl Grijalva, the City Council, Board of Supervisors, Freddie Mac (NYSE: FRE) and more than 20 local organizations have teamed up to launch the "Don’t Borrow Trouble Pima County " anti-predatory lending campaign.

Congressman Raúl Grijalva, Board of Supervisors Chairman Richard Elías, City Council Representative Steve Leal and Freddie Mac believe that understanding homeowner rights and the homebuying process is an important first step in protecting families and their homes. The campaign combines consumer education, advertising, and a community-wide referral network to help families avoid unscrupulous lenders who charge exorbitant loan rates, hidden fees, onerous prepayment penalties and use unnecessarily complicated contracts.

"The Don't Borrow Trouble program is a great resource for Pima County," said Congressman. Grijalva. "By helping homeowners avoid the pitfalls of predatory lending, families will know that the power to protect both their home and finances is in their hands."

Consumers are urged to call the Don’t Borrow Trouble help line at 520-792-3087. 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. Referrals to appropriate legal or financial experts will also be available.

"Predatory lending undermines families. Predatory lending deprives people of equity and their homes through the use of very questionable practices. Instead of helping the most vulnerable and weak, they are targeted as opportunities and profit centers," said Councilmember Steve Leal.

The Don’t Borrow Trouble campaign also uses brochures, a Freddie Mac website at www.dontborrowtrouble.com, radio and television public service announcements and workshops to educate consumers about predatory lending practices. 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.

"Don't Borrow Trouble will help Pima County and its families better understand the predatory nature of some lenders. We need to educate families before they get into trouble," said Board of Supervisors Chairman Elías.

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.

"Predatory lending practices erode our communities by replacing 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."

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 43 locations across the country, and has received more than 200,000 inquiries to the Campaign’s help line.

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.

Tips for Avoiding Borrowing Pitfalls

Source: Freddie Mac

1. 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!
2. 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.
3. 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
4. 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.
5. 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.
6. 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."
7. 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.
8. 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.
9. 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.
10. 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.
11. If you're not sure, don't sign! Get advice first! Talk to a community-based consumer credit counseling agency or housing counselor.

Pima County Coalition Members for 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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