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August 15, 2000
Freddie Mac Targets Predatory Lending
A public information campaign launched in 12 cities nationwide stands to alert millions of
Americans about abusive lending practices.
SocialFunds.com --
Predatory lending, the practice of charging unfairly high interest rates and fees for loans
targeted to low-income and minority communities, has gained the attention of social investors
through three shareholder resolution proposals this year. A national campaign launched by Freddie
Mac approaches the problem from the consumer end, educating borrowers about the dangers of
predatory lending.
 Freddie Mac, the publicly owned, mortgage-consolidating
corporation, announced last week it was teaming up with mayors and community groups in 12 major
cities to launch local "Don't Borrow Trouble" campaigns. Considered a leader among socially
responsible companies, Freddie Mac has financed home-ownership for more than 26 million families
since it was chartered by Congress in 1970.
"Freddie Mac is committed to being an industry
leader in the fight against predatory lending practices," said Dwight Robinson, Freddie Mac's
Senior Vice President of corporate relations. "That is why we are working with local leaders and
community groups across the nation to educate potential borrowers about predatory lending practices
that are trapping too many families in loans they cannot afford and stripping away their
hard-earned home equity."
The campaign will use ads, billboards, websites, and public
service announcements to alert millions of Americans about predatory lending, which may involve
$100 billion nationwide. Hotlines in English and Spanish will inform borrowers, and give referrals
to local government and non-profit agencies to help them understand and resolve specific lending
problems.
The "Don't Borrow Trouble" campaign was pioneered in Boston, where it was
created by Mayor Thomas M. Menino and the Massachusetts Community & Banking Council, a
collaboration between banking and community representatives to encourage community investment in
low-income and minority neighborhoods. Its success in Boston has spurred Freddie Mac to introduce
it to 12 other cities nationwide.
Freddie Mac is launching the anti-predatory lending
campaign in Chicago, Atlanta, Baltimore, New Orleans, Los Angeles, Oakland, Raleigh-Durham,
Washington, DC, Cleveland, Buffalo, Syracuse, and Las Vegas. The company will provide seed funding
and technical assistance over the next year to help these communities start their own 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.
"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. "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 predatory lenders."
The "Don't Borrow Trouble" campaign is just the latest in
a series of actions by Freddie Mac to help protect borrowers from predatory-lending practices.
These steps include banning the purchase of mortgages with unwarranted insurance policies,
requiring subprime lenders to accurately and fully report borrower credit files to credit
repositories, and introducing innovative loan products for borrowers with credit issues.
Freddie Mac's support of the "Don't Borrow Trouble" campaign is more than a consumer education
effort, it is a strong message to lenders that the company will not support predatory lending
practices by purchasing the resulting mortgages. Their leadership on this issue may prove critical
in the elimination of unethical banking practices victimizing minorities and the elderly.
©
SRI World Group, Inc. All Rights Reserved.
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