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Freddie Mac, 12 Cities Launch National Effort to Warn Borrowers About Predatory Lending Practices

Submitted by: Freddie Mac Foundation

Categories: Business Ethics

Posted: Aug 10, 2000 – 12:00 AM EST

 

"Don't Borrow Trouble" Campaign to Alert Millions of Americans About Predatory Lending Risks

Aug. 10 /CSRwire/ - Freddie Mac today announced it was teaming up with the mayors and community groups in 12 major cities to launch local campaigns that will alert millions of Americans about the dangers of predatory lending and set up special hotlines they can call to get advice and report problems.

Pioneered in Boston, the "Don't Borrow Trouble" campaigns will use a combination of ads, billboards, websites, and public service announcements in English and Spanish to educate borrowers about predatory lending practices and encourage them to call a 1-800 number for referrals to local government and non-profit agencies to help them understand and resolve specific lending problems. The "Don't Borrow Trouble" campaign was created by Boston Mayor Thomas M. Menino and the Massachusetts Community Banking Council.

The 12 cities where Freddie Mac is launching the anti-predatory lending campaign include Chicago, Atlanta, Baltimore, New Orleans, Los Angeles, Oakland, Raleigh-Durham (and Eastern North Carolina), Washington, DC, Cleveland, Buffalo, Syracuse, and Las Vegas.

"Predatory lending represents a frontal assault on homeowners all across America. Freddie Mac's 'Don't Borrow Trouble' campaign is a move to show lenders that it is not going to support this practice by purchasing these mortgages," said Senator Paul S. Sarbanes (D-Md), the ranking minority member of the Senate Banking, Housing and Urban Affairs Committee. "Through consumer education, Freddie Mac is providing borrowers with a renewed sense of hope and opportunity for the American dream of homeownership."

Freddie Mac will provide seed funding and technical assistance over the next year to help the selected communities launch the local "Don't Borrow Trouble" campaigns. Additional on-site training will be provided by the Boston-based National Consumer Law Center, which provided training for Boston's campaign. The local "Don't Borrow Trouble" campaigns will be carried out by local government agencies in cooperation with a wide range of local partners, including non-profit housing providers, credit counseling agencies, fair housing associations, industry groups and responsible lenders.

"Freddie Mac is committed to being an industry leader in the fight against predatory lending practices. That is why we are working with local leaders and community groups across the nation to educate potential borrows about predatory lending practices that are trapping too many families in loans they cannot afford and stripping away their hard-earned home equity," said Dwight Robinson, Freddie Mac's senior vice president of corporate relations. "'Don't Borrow Trouble' is a proven and valuable tool in the fight against predatory lending."

"'Don't Borrow Trouble' is the best new idea I've seen in the fight against abusive lending practices. By bringing America's families this practical and effective way to spot and avoid those "too good to be true" deals, predatory lenders will find it harder to trick new customers into keeping them in business," said Mayor Marc H. Morial, New Orleans, La., and Vice President, United States Conference of Mayors

Making the "Don't Borrow Trouble" campaign available in cities across the country is the latest in a series of actions by Freddie Mac to help protect borrowers from predatory-lending practices. These steps include a ban on the purchase of mortgages with single-premium credit insurance policies and requiring subprime lenders to accurately and fully report borrower credit files to credit repositories, as well as the introduction of innovative loan products for borrowers with credit issues.

"I am very pleased that Freddie Mac will help other mayors implement Boston's 'Don't Borrow Trouble' campaign," said Boston Mayor Thomas M. Mennino. "As Mayor, I want to protect Boston's homeowners from those predators who would rob them of the equity and security of their homes. This awareness campaign, along with Freddie Mac's other efforts, will help mayors across the country to prevent the foreclosures and abandonment that follow these predators."

"Predatory lenders continue to aggressively market mortgages to vulnerable homeowners on exorbitant terms," added Gary Klein, a senior attorney at the National Consumer Law Center, which will provide local training. "We are pleased to join with Freddie Mac to educate community leaders on the dangers of predatory lending," he said.

Freddie Mac is a stockholder-owned corporation chartered by Congress in 1970 to create a continuous flow of funds to mortgage lenders in support of home ownership and rental housing. Freddie Mac purchases mortgages from lenders and packages them into securities that are sold to investors. Over the years, Freddie Mac has opened the doors for one in six home buyers and two million renters across America.

For more information, please contact:

Corporate Relations Freddie Mac
Phone: (703) 903-3933

 

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