MISSISSIPPI HOMEOWNERS FACING MORTGAGE TROUBLE HAVE NEW ALLY

Rep. Thompson encourages Mississippians to call the help line

Jackson, MS – At a press conference here today, a coalition of 10 private and public organizations, including Housing Education and Economic Development (HEED), Mississippi Home Corporation (MHC) and Freddie Mac (NYSE: FRE), officially kicked-off the Don't Borrow Trouble® Mississippi consumer education campaign and help line to combat predatory lending throughout the state.

The new campaign will encourage individuals to call 866-923-4333. Callers will be referred to trained professionals who can offer free advice for purchasing a home, refinancing, consolidating debt, taking out a home-equity loan, and mortgage foreclosure prevention, as well as be referred to appropriate legal or financial experts.

Freddie Mac is the principal sponsor of Don't Borrow Trouble's expansion throughout the United States and has brought the campaign to more than 40 locations across the country. The Mississippi Don't Borrow Trouble campaign utilizes brochures, flyers, radio public service announcements and the www.dontborrowtrouble.com website to educate consumers who are most vulnerable to predatory lending – the elderly, Hurricane Katrina victims or individuals effected by other similar natural disasters, minorities and low- to moderate-income individuals. By combining consumer education materials with housing counseling assistance, the campaign helps consumers avoid abusive lending practices, such as exorbitant interest rates, excessive fees and pressuring tactics.

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.

"Mississippians should not have to fall prey to predatory lenders in order to own a home," said Rep. Bennie Thompson (D-MS)."Don't Borrow Trouble will offer homebuyers-to-be an educational opportunity that will help them to avoid the road to foreclosure. I commend the organizations involved on their vision. Homeownership just got a little bit easier for some families."

Additional organizations participating in this campaign include: AJFC Community Action Agency, Greater Greenville Housing, Mississippi Housing Partnership, Trustmark National Bank, Voice of Calvary Ministries, The Enterprise Corporation of the Delta and Visions of Hope.

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.

"The State of Mississippi needs the Don't Borrow Trouble campaign due to the increase in housing scams and ensuing theft of homeowners' equity. This statewide initiative will protect our citizens from lending practices that can ruin their personal credit and weaken our community," said Charles Harris, director of HEED.

According to Dianne Bolen, MHC executive director, this statewide predatory awareness campaign will assist MHC in furthering its goal of enhancing long-term economic viability by financing safe, decent, affordable housing and helping working families build wealth.

"The Don't Borrow Trouble Mississippi statewide campaign goes hand in hand with the objectives MHC aims to accomplish as the state's housing finance authority," said Bolen. "Making wise financial decisions can lead to wealth building and eventually will strengthen communities. It is important for MHC to support this campaign to ensure more potential homebuyers are aware of the financial choices that are available to them. Education is the key to combating predatory lending."

"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.

Don't Borrow Trouble was pioneered in Boston by Mayor Thomas M. Menino and the Massachusetts Community and Banking Council.

Tips For Avoiding Borrowing Pitfalls
Source: Freddie Mac

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 and complete. 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. 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."
   
   
5. 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.
   
   
6. 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.
   
   
7. 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.
   
   
8. 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.
   
   
9. If you're not sure, don't sign! Get advice first! Talk to a community based consumer credit counseling agency or housing counselor.
   
   
10. If you cannot pay your mortgage, call your mortgage company now. As soon as you realize that you are unable to make your payments, talk about your circumstances with the mortgage company to which you send your monthly mortgage payment. Your options to retain your home are most effective when you are only one or two payments behind.

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.

###