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Mayor Peter Carroon Joins Freddie Mac and Community Groups to Launch Don't Borrow Trouble® Salt Lake Campaign

Focus Is On Helping Consumers Avoid Predatory Lending

Salt Lake City, UT – At a press conference here today, Salt Lake City Mayor Peter Carroon joins a coalition of private and public organizations headed by Perfect Home Living, Inc., and Freddie Mac (NYSE: FRE), to kick off the Don't Borrow Trouble® campaign in Salt Lake City, Utah. This public education campaign is aimed at preventing predatory lending practices and protecting home ownership in the Salt Lake City area.

The coalition urges consumers to call the Don't Borrow Trouble help line at 866.217.1718. 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.

"There are many dangerous lenders preying on good, hard-working people," said Salt Lake County Mayor Peter Carroon. "This program will go a long way in educating and protecting all of us."

"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 Dwight Robinson, senior 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."

"Being able to anticipate change and having the resources to keep pace is what's needed to stop real estate fraud and predatory lending before it happens. The Don't Borrow Trouble campaign is the first line of defense we can provide to consumers against such practices," says Sheri Fitzpatrick, CEO of Perfect Home Living, Inc. "Today's first-responders to incident reports of real estate fraud are reactive rather than proactive, arriving after the crisis, when it's often too late and too costly to combat, as we are witnessing today in the sub-prime market. Today's marketplace leverage comes at a lightening pace and those charged with educating on such matters have to be committed to working at such a pace in order to anticipate tomorrow's trends."

Fitzpatrick says that Perfect Home Living's strategy is to use coordinated efforts from both the private and public sector to educate would-be homeowners about the potentials for fraud and predatory lending.

"The Utah Homebuyer Education Coalition is pleased to be a part of this campaign," said Kim C. Datwyler, executive director of Neighborhood Nonprofit Housing Corporation in Logan, Utah, and current president of the Utah Homebuyer Education Coalition. "Predatory lending practices impact our communities and devastate the lives of victims and their families. Coalition-affiliated housing counseling agencies work with homeowners who frequently feel the consequences of predatory lending for many years. Many of these individuals have no idea where to turn for help. The Don't Borrow Trouble Campaign will give them the resources to recognize predatory lending practices, help them avoid the loss of their homes, and assist them with credit repair issues. This campaign also gives Utah the opportunity to eliminate predatory lending practices throughout the state, which benefits everyone."

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 Salt Lake City, UT 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 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.

Participants in the Don't Borrow Trouble Salt Lake campaign are: AAA Fair Credit Foundation, Community Action Services, Community Development Corporation of Utah, LifeCare, Neighborhood Housing Services of Salt Lake, Perfect Home Living, Inc., Salt Lake City Corporation Housing and Neighborhood Development, Salt Lake Community Action, Salt Lake County Aging Services, Utah Housing Corporation and Zion's Bank.

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 corporation established by Congress in 1970 to support homeownership and rental housing. Freddie Mac purchases single-family and multifamily 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 more than 50 million times, ensuring financing for one in six homebuyers and more than four million renters.

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

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