DON'T BORROW TROUBLE CENTRAL VIRGINIA CAMPAIGN LAUNCHED TO HELP CONSUMERS AVOID PREDATORY LENDING

Charlottesville, VA – At a press conference here today, a coalition of private and public organizations headed by Piedmont Housing Alliance and Freddie Mac (NYSE: FRE), are kicking off the Don't Borrow Trouble® campaign in Central Virginia. This public education campaign is aimed at preventing predatory lending practices and protecting home ownership in Albemarle, Fluvanna, Greene, Louisa and Nelson Counties.

The coalition urges consumers to call the Don't Borrow Trouble help line at 434-817-2436. The 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.

"Across the nation, increasing numbers of individuals are facing foreclosures or defaults," said Stu Armstrong, executive director, Piedmont Housing Alliance. "We encourage individuals who think they may be in over their heads to call the Don't Borrow Trouble helpline for advice. It is exciting to know that our efforts to educate the community about predatory lending are part of the Don't Borrow Trouble campaign."

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 Don't Borrow Trouble Central Virginia campaign also uses brochures, radio and television public service announcements and workshops 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.

"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."

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.

Members of the Don't Borrow Trouble Central Virginia campaign are: Albemarle County; BAMA Works Fund of Dave Matthews Band; Bank of America; Charlottesville Area Community Foundation; Charlottesville Area Association of Realtors®; City of Charlottesville; Consumer Action and Capital One; Department of Housing and Community Development; Freddie Mac; Habitat for Humanity for Greater Charlottesville; Housing Opportunities Made Equal, Richmond VA; Jefferson Area Board for Aging; Legal Aid Justice Center; Quality Community Council; SunTrust; Thomas Jefferson; Community Workforce Housing Fund; United States Department of Housing and Urban Development; Piedmont Housing Alliance; United Way; Urban Vision; Charlottesville Virginia Partnership to Encourage Responsible Lending; Virginia Housing and Development Authority; Virginia National Bank; and Wachovia.

"As a leader in providing homeownership and wealth-building products and services to individuals, families and communities, Bank of America wholeheartedly supports the Don't Borrow Trouble Central Virginia campaign, said Eric Johnson, president, Bank of America Charlottesville. "This partnership will help people continue making the dream of affordable homeownership a reality."

Helen M. O'Beirne, responsible lending coordinator for Virginia Partnership to Encourage Responsible Lending added, "Fighting predatory lending at the legislative level, like VaPERL does each year, is only half of the battle. Campaigns like Don't Borrow Trouble are vital in educating the public about the dangers of predatory lending. Only when knowledge and understanding comes through both channels can the outcomes be successful."

Teresa W. Walker, vice president and community development officer for Wachovia, said "In 2006, Wachovia trained more than 26,000 lower income individuals and families in PC, Internet and financial literacy programs. Wachovia works closely with community partners, like Piedmont Housing Alliance, to reach local communities, donating time and resources to transform the economic futures of individuals and families."

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

Since the introduction of the Freddie Mac Program Plus network of multifamily loan originators and servicers in 1993, Freddie Mac has provided financing for over 48,000 multifamily properties totaling more than $147 billion.

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

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!
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.
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.
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.
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.
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."
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.
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.
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.
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.
Get advice first! Talk to a community-based consumer credit counseling agency or housing counselor.

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