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Don't Borrow Trouble San Francisco Campaign Launched to Help Consumers Avoid Predatory Lending

San Francisco, CA – At a press conference in the Bayview today, a coalition of private and public organizations headed by Mission Economic Development Agency (MEDA), the Mayor's Office of Housing, the County Assessor-Recorder and Freddie Mac (NYSE: FRE), is kicking off the Don't Borrow Trouble® campaign in San Francisco. This public education campaign is aimed at preventing predatory lending practices – warning existing and prospective homebuyers of the dangers of predatory lending – and protecting current homeowners.

The coalition urges consumers to call the Don't Borrow Trouble help line at 888-780-5850. The hotline is staffed by HUD certified housing counselors who can offer free assistance to individuals seeking information about purchasing a home and who may be victims of predatory lending. When appropriate, individuals can also be referred for legal assistance.

"San Francisco is one of the highest cost housing markets in America. In order for many families to afford homes here, their incomes have been overstated. As a result, a growing number of borrowers are now unable to afford their mortgage payments," said Marna Schwartz, Anti-Predatory Lending Coordinator at MEDA. This campaign will raise awareness of the risks of a changing market and will look to increase resources for borrowers who are at risk of losing their homes."

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 45 locations across the country. Don't Borrow Trouble San Francisco is one of its most recent initiatives. San Francisco's campaign will use 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 outreach, education and housing counseling for these targeted neighborhoods, the campaign helps consumers avoid abusive lending practices, such as excessive fees and pressuring tactics.

The Don't Borrow Trouble campaign brings together the four housing counseling agencies in San Francisco – Asian Inc., Consumer Credit Counseling Service of San Francisco, Mission Economic Development Agency and San Francisco Housing Development Corporation – as well as legal service provider Housing and Economic Rights Advocates, in order to raise awareness on how to be a savvy consumer when shopping for a loan.

"Predatory lending takes many dishonest forms and has ruined the lives of people from all walks of life. Consumer education is a great way to help people avoid poor financial decisions," said State Senator Leland Yee (D-San Francisco/San Mateo). "Don't Borrow Trouble is an important informational resource for all Bay Area residents to help them choose the right path towards a bright and secure future to homeownership."

In a recent Needs Assessment Study conducted by MEDA, it was found that one in ten San Francisco homebuyers receives a high cost loan and that high cost loans and high loan-to-value ratios are concentrated in San Francisco's Southeast neighborhoods: Bayview, Visitacion Valley, Excelsior, Crocker Amazon, Outer Mission and Ocean View.  

"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. "These organizations should be commended for banding together and combining their resources to educate consumers on the perils of predatory lending practices."

Although the range of predatory lending activities is wide, most practices fall under the following categories: excessive fees and interest rate-risk disparities, over-lending without determining a borrower's ability to repay, asset-based equity stripping and lack of disclosure or lying about important information as it relates to the loan or real estate transaction.

"Loss of home assets through default, fraud or foreclosure ultimately injures whole families, neighborhoods and cities," Schwartz added. "It is not enough simply to create homeownership – it must also be sustained and protected from abusive lending practices."

Members of the Don't Borrow Trouble San Francisco campaign are:
Asian, Inc.; Consumer Credit Counseling Services of San Francisco; County Assessor-Recorder; Freddie Mac; Housing and Economic Rights Advocates; Mayor's Office of Housing; Mission Economic Development Agency; Patelco Credit Union; PMI Mortgage Insurance Co.; San Francisco Association of Realtors; San Francisco Housing Development Corporation; US Bank; Walter and Elise Haas Sr. Fund; and Washington Mutual.

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

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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