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 MAKE YOUR OPINION COUNT - Click Here http://tbutton.prnewswire.com/prn/11690X72631585RELATED LINKS
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