Submitted by: Freddie Mac Foundation
Categories: Community Development
Posted: Jan 28, 2001 – 11:00 PM EST
Collaborative Includes Affordable Mortgage Products for Home Rehabilitation
Collaborative Includes Affordable Mortgage Products for Home Rehabilitation
A new collaborative effort to increase and sustain affordable homeownership in Eastern North Carolina was launched today by Freddie Mac, one of the nation's largest sources of mortgage financing. The public-private collaborative, CarolinaGold, brings a full range of products and services to bear against obstacles to successful homeownership. Freddie Mac is committed to purchasing up to $100 million of qualified mortgages from participating lenders. The initiative includes flexible, low down-payment mortgage products, the national anti-predatory lending campaign Don't Borrow Trouble, pre- and post-purchase counseling, and real estate services including referrals and financing for home rehabilitation. The rehabilitation component will do much to help repair homes damaged by storms last year.
"North Carolina has led the nation in stopping unfair lending, and now we have the chance to lead again by providing better loan options for people," said Attorney General Roy Cooper, who wrote the new laws cracking down on predatory lending in 1999. "Good advice and more choices will help homeowners get the most for their money."
"With money seemingly flowing from the television screen, the Don't Borrow Trouble campaign will educate prospective homeowners, helping them realize the American dream and protect their investment," said Rep. David Price.
"This is a dynamic initiative designed to address a range of homeownership obstacles, from the availability of down payment funds, learning how to avoid predatory loans, to getting homeownership and credit counseling services that ensure long and successful homeownership," said Craig Nickerson, vice president for Community Development Lending at Freddie Mac. "This effort builds on existing public, private and non-profit resources and adds new value through improved coordination and sharing of ideas that work."
The North Carolina Fair Housing Center is the lead nonprofit organization for the initiative.
"I am very excited about this initiative because according to various studies, 40% of the people in the sub-prime loan market actually qualify for conventional loan products. With the CarolinaGold Initiative and the Don't Borrow Trouble consumer awareness campaign, we will be able to reach these people and get them the credit they deserve," said Stella Adams, Executive Director of the NC Fair Housing Center.
A number of other organizations are working with Freddie Mac to move this effort forward. They are: North Carolina Fair Housing Center; Consumer Credit Counseling Service of Durham, Durham Affordable Housing Coalition, Downtown Housing Improvement Corporation, North Carolina Community Development Initiative, City of Durham, North Carolina Low Income Housing Coalition, North Carolina Association of Community Development Corporations, Pamilico Sounds Legal Services, Legal Services of Cape Fear, The Foreclosure Prevention Project, North Carolina NAACP, El Pueblo, Eastern Carolina Legal Services, Self Help, College Park - Idlewild Community Progress and Coalition for Responsible Lending. Lenders involved in the initiative are: Branch Banking & Trust, Centura Bank and SouthTrust Mortgage Corporation.
The following sections outline key components of the CarolinaGold initiative.
Access to Affordable Mortgage Products
The initiative is based on a suite of flexible and affordable mortgage products, including Carolina Community Gold©, a mortgage product that allows a person to purchase a home for as little as $1,000 of their own funds combined with financial assistance from a variety of acceptable sources for a total minimum down-payment of three percent of the home's purchase price.
In addition to Carolina Community Gold, the initiative offers borrowers Freddie Mac's Alt 97 product, a mortgage available through participating lenders that also requires a three percent down payment, but it is not required that the cash come from a borrower's own funds. This product is available to borrowers with strong credit.
For those borrowers who want to improve their credit and become homeowners, the initiative includes CreditWorksSM, a debt management and mortgage product. Potential homebuyers successfully participating in a debt management program administered by an affiliate of the National Foundation for Credit Counseling can obtain market rate mortgage financing, avoiding the higher cost of some mortgages offered to persons without a good credit history. Consumer Credit Counseling Service of Durham will administer this aspect of the initiative.
Participating organizations in the initiative recognize that downpayment is another major obstacle to homeownership. To help more people become homeowners, selected mortgages products within the CarolinaGold initiative accept money saved through Individual Development Accounts for the purpose of downpayment. Unlike other programs that accept only borrower saved IDA funds, this initiative counts borrower money as well as matching funds as borrower equity.
Anti-predatory lending activities
Freddie Mac and the initiative participants are at the forefront of fighting predatory lending practices. The initiatives includes the Don't Borrow Trouble tool-kit, a multimedia campaign that educates borrowers about how to identify predatory loans, and avoid them so that homeownership remains a dream and does not turn into a nightmare of delinquency, foreclosure and maybe bankruptcy. Many aspects of this effort will be managed by CCCS-Durham. Borrowers interested in learning more about Don't Borrow Trouble can call 1-800-218-6499.
Real Estate Services
The rehabilitation of existing housing is a key component of the initiative and the mortgage products within CarolinaGold are effective tools to refurbish homes. The result will be more attractive and livable homes, and stabilized neighborhoods. This component is particularly important for homeowners still trying to recover from damages done by Hurricane Floyd more than one year ago. Too many homeowners who are seeking rehabilitation financing are accepting predatory loan products. This initiative will help stop families from being victimized a second time.
The North Carolina Fair Housing Center is a statewide nonprofit organization dedicated to the creation of equal housing opportunity and equal access to all citizens regardless of race, color, religion, sex, national origin, handicapping condition or familial status. The Center is located at 114 W. Parrish Street, Durham, NC. The Center provides a number of services to industry, government and individuals. The Center twice received recognition from the US Department of Housing and Urban Development for Outstanding Achievements in education, outreach and advocacy.
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 passthrough securities and debt instruments in the capital markets. Over the years, Freddie Mac has opened doors for one in six homebuyers and more than two million renters in America.
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