Freddie Mac Accepts President Bush's Challenge to Help Add 5.5 Million Minority Homeowners

    MCLEAN, Va., June 17 /PRNewswire-FirstCall/ -- Freddie Mac, one of the
 nation's largest investors in residential mortgages, today announced it would
 help meet President George W. Bush's challenge to add 5.5 million minority
 homeowners.  In a speech earlier today, President Bush called on the nation's
 housing industry to invest more than $1 trillion expanding homeownership
 opportunities for America's minorities.
     Today, Freddie Mac is undertaking a range of initiatives aimed at helping
 minority families overcome a variety of barriers to homeownership through a
 combination of aggressive outreach programs, borrower education efforts and
 innovative affordable mortgage products.
     "President Bush boldly called on the housing industry to increase minority
 homeownership in America.  We fully support this national priority, and
 Freddie Mac will play a major part in achieving it," said Leland C. Brendsel,
 Freddie Mac's chairman and CEO.
     "Freddie Mac already has opened doors to more than 30 million homes,
 helping to propel the nation's homeownership rates to record levels, with more
 families of all racial and ethnic backgrounds owning homes than ever before,"
 Brendsel said.  "Freddie Mac is the national leader at bringing simplicity,
 innovation, and accessibility to the mortgage lending process.  We are up to
 the challenge to accelerate growth in minority homeownership."
     Specifically, Freddie Mac is undertaking 25 major initiatives,
 collectively called "Catch the Dream," that are intended to help millions of
 minority families achieve affordable homeownership.  These initiatives will
 span the entire "Homeownership Lifecycle."  The Homeownership Lifecycle
 includes (1) providing information to help consumers understand that
 homeownership is within reach; (2) expanding the availability of affordable
 for-sale housing; (3) equipping the mortgage finance industry with the tools
 to meet the financing needs of the next generation of homebuyers; (4)
 providing more affordable home financing opportunities and (5) helping
 homeowners build and protect their home equity.
     For example, Freddie Mac, working with lenders and community
 organizations, plans to expand its popular affordable mortgage products for
 families with a history of impaired credit or a lack of funds for
 downpayments, as well as bring its proven financial literacy and anti-
 predatory awareness initiatives, CreditSmart(SM) and Don't Borrow Trouble(SM),
 to more communities across the nation.  Freddie Mac envisions investing $400
 billion in mortgages made to minority families by the end of the decade.
     Although two-thirds of the nation's households own homes, 45.7 percent of
 the nation's Hispanic families and 46.3 percent of the nation's African-
 American families owned homes in 2000, according to the U.S. Census Bureau and
 Freddie Mac.  According to Freddie Mac, as many as 60 percent of the nation's
 new homebuyers during this decade will be minority families.
     Freddie Mac is a stockholder-owned corporation established by Congress in
 1970 to create a continuous flow of funds to mortgage lenders in support of
 homeownership 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 doors for one in six homebuyers in America.
 (For more information about Freddie Mac, visit http://www.freddiemac.com .)
 
 
          Freddie Mac's Commitment to Expanding Minority Homeownership
 
     In his State of the Union address on January 29, 2002, President Bush
 called for "broader homeownership, especially among minorities."  Playing a
 vital role in our nation's mortgage markets, Freddie Mac has opened doors for
 more than 30 million families.  We're up to the challenge of doing more.
 Created by Congress, Freddie Mac's job is to ensure a reliable supply of funds
 to mortgage lenders in support of homeownership and rental housing.  We
 attract capital from around the world to finance housing in America, and we
 constantly innovate to deliver it as effectively as possible.  As a result,
 mortgage rates are lower, 30-year fixed-rate financing is plentiful, and
 borrowers get loan approvals in minutes.
     The high level of support provided by Freddie Mac and the secondary
 mortgage market has produced the best housing finance system in the world.
 The nation's homeownership rate has reached a record high, with more families
 of all racial and ethnic backgrounds owning homes than ever before.  Still,
 less than half of America's minority households have achieved the dream of
 homeownership.
     Building on our strong record of expanding access to the mortgage market,
 Freddie Mac is launching 25 high-impact initiatives to accelerate the growth
 in minority homeownership.  We call this comprehensive approach Catch the
 Dream -- and we've left no stone unturned.  Our initiatives range from best-
 in-class homebuyer outreach and education to new technologies and mortgage
 products designed to put families into homes they can afford and keep.  We
 plan to document our progress in implementing the initiatives and dismantling
 barriers in an annual report to HUD Secretary Martinez.
     Representing a team effort with mortgage lenders, nonprofit housing and
 community organizations, and other industry leaders, Catch the Dream is
 Freddie Mac's contribution to making the dream of homeownership a reality for
 5.5 million more minority households for the decade.  As the purchaser of one
 in six mortgages, Freddie Mac also is committed to providing more than $400
 billion in mortgage financing to meet these needs, an increase of $160 billion
 above our projected purchases.
     The 25 initiatives are described below by the relevant phase of the
 Homeownership Lifecycle, which represents a systematic approach to dismantling
 barriers.  It begins with creating greater awareness of the possibilities for
 homeownership and leads to homeowners' successful accumulation of home equity.
 The cycle is self-reinforcing:  A portion of the wealth built up through one
 generation of homeowners can be passed to the next, so that the cycle can
 begin again.
     The five phases of the Homeownership Lifecycle are:  Catching the Dream,
 Finding Affordable Homes, Equipping the Industry, Getting the Loan and
 Building Wealth for the Future.
 
     Phase I
     Catching the Dream seeks to overcome the many intangible barriers to
 homeownership, including misinformation about the home-buying process,
 mistrust, fear of rejection or disclosure of financial information.  The goal
 of this phase is to foster the belief that homeownership is desirable and
 within reach.
 
     1. Dispel the Myths
        *  Homeownership ad campaign in select areas involving leaders in
            minority communities
 
     2.  Toolkits and Kiosks
         *  New, multilingual marketing campaign using unconventional outreach
            techniques, such as homeownership kiosks
 
     3. Trusted Intermediaries
        *  Engage national nonprofit minority organizations and community-based
           nonprofits in the provision of homebuyer information
 
     4.  Faith-Based Solutions
         *  Harness new and existing faith-based strategies to put families on
            path to homeownership
 
     5. CreditSmart Espanol(SM)
        *  Spanish-language version of Freddie Mac's highly acclaimed
           CreditSmart(SM) financial literacy campaign
 
     Phase 2
     Finding Affordable Homes recognizes that many families become discouraged
 because they cannot find homes they can afford in areas in which they want to
 live.  The goal of this phase is to ensure that consumers have greater choice
 of affordable, attractive homes and that incentives are in place to encourage
 investment in homeownership.
 
     6. Breaking New Ground
        *  Promote quality construction of new, affordable single-family
           housing, particularly starter homes for first-time buyers
 
     7. Community Hope
        *  "Best practices" campaign to rejuvenate urban communities, including
            promotion of place-based employer-assisted housing and reclamation
            of deteriorated and abandoned property
 
     8. New Urban Incentives
        *  Encourage investment in urban neighborhoods, including exploring the
           viability of equity assurance products to protect home values in
           economically distressed areas
 
     9. Military Housing
        *  Collaborative effort with the Department of Defense to address the
           housing and financial literacy needs of military personnel
 
     10. Section 8 to Homeownership
         *  New broad-based approaches for using Section 8 rental assistance
            for homeownership
 
     Phase 3
     Equipping the Industry recognizes that mortgage and real estate
 professionals often lack the technology and other tools to help consumers
 overcome credit, down payment and other barriers to homeownership.  This phase
 also focuses on strengthening the nation's network of housing counseling
 organizations.  The goal of this phase is to assist the industry in meeting
 the financing needs of the next generation of homebuyers.
 
     11. Banking the Unbanked
         *  Explore new approaches to encourage unbanked consumers to enter the
            financial mainstream
 
     12. Tools and Technology
         *  Provide state-of-the-art technology to emerging "first contact"
            agents, for example, nonprofits and faith-based institutions, as
            well as mortgage and real estate professionals
 
     13. Cross-Border Credit
         *  Create initiative to enhance acceptability of international credit
            reports for U.S. mortgage underwriting
 
     14. Housing and Mortgage Market Diversity
         *  Industry-wide internships to attract minority men and women
            entering the workforce to careers in mortgage banking, real estate,
            finance, etc.
 
     15. Multilingual Documents
         *  State-focused effort to translate key mortgage forms into Spanish
 
     Phase 4
     Getting the Loan focuses on efforts to continually improve mortgage
 underwriting and expand access to financing.  The goal of this phase is to
 ensure that consumers obtain the lowest-cost mortgage financing available.
 
     16. Automating the Use of Nontraditional Credit
         *  Develop viable means for automated underwriting systems to evaluate
            sources of non-traditional credit
 
     17. Solutions for Blemished Credit
         *  Increase access to affordable mortgage products for borrowers with
            weak or blemished credit
 
     18. Financing for Islamic Families
         *  Create standard home-finance product to address religious
            objections to payment of interest
 
     19. Down Payment Assistance
         *  Solutions for borrowers unable to accumulate funds for down payment
 
     20. Expanded Approval Rates
         *  Higher approval rates means greater homeownership opportunities
 
     21. Innovative Risk Sharing
         *  Involve major lenders and nontraditional intermediaries in the
            creation of innovative risk-sharing arrangements
 
     Phase 5
     Building Wealth for the Future recognizes that it is not enough simply to
 put people in homes -- they need to succeed as homeowners in order to build
 wealth for retirement or other needs.  The goal of this phase is to support
 families in making timely mortgage repayment and to help them avoid predatory
 lending scams.
 
     22. Don't Borrow Trouble
         *  Expanded effort to take award-winning Don't Borrow Trouble consumer
            awareness program to more communities nationwide
 
     23. Move Subprime Borrowers into Prime
         *  Pilot program to provide automated underwriting tools to select
            group of subprime lenders to identify applicants who qualify for
            conventional conforming mortgages
 
     24. Ban on 5-Year Prepayment Penalty
         *  Freddie Mac's ban on purchasing subprime mortgages with prepayment
            penalties that exceed five years
 
     25. High Touch Servicing
         *  Proactive, focused servicing initiatives designed to identify,
            contact and assist borrowers in Freddie Mac's affordable mortgage
            products
 
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SOURCE Freddie Mac
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