HUD Applauds Purchase of Loans Closed Between June 1-Aug 29 for Freddie Mac Retained Portfolio for Easing Lender Liquidity, Short-Term Financing Concerns MCLEAN, Va., Sept. 26 /PRNewswire-FirstCall/ -- In an effort to help the American housing finance system better absorb Hurricane Katrina's aftershocks, Freddie Mac today announced it was easing some of its policies in order to purchase an estimated $300 million worth of single-family mortgages that were closed between June 1 and August 29 and secured by properties in areas that were heavily impacted by the storm. Today's announcement is intended to help some Freddie Mac lenders with closed loans in their pipelines -- that is, loans that lenders funded and closed in anticipation of sale to Freddie Mac. These loans may no longer be eligible for sale because of potential property damage or income loss caused by Hurricane Katrina, although they complied with Freddie Mac's Seller/Servicer Guide requirements when they were originated. Typically such loans are unacceptable to Freddie Mac, even with lifetime recourse. Given the special circumstances surrounding these mortgages, Freddie Mac said it would purchase the loans for its retained portfolio to provide lenders with immediate liquidity relief. None of the loans will go into mortgage pools backing Freddie Mortgage Participation Certificates (PCs). The purchase offer expires on October 31, 2005. HUD Secretary Alphonso Jackson said: "Freddie Mac's action will go a long way toward bringing critically needed capital into the Gulf Region. Along with the tremendous federal reinvestment that is taking place, I'm heartened to know that our partners are doing their bit to keep the home mortgage finance pipeline opened so we can accelerate the recovery in rebuilding of these devastated communities." "By purchasing these loans we can expedite payments to our lenders, who need additional funds for storm recovery activities, while simultaneously protecting the loan pools backing Freddie Mac PCs from Katrina's impact," said Freddie Mac Chairman and CEO Richard F. Syron. "I especially want to thank our regulators, the Department of Housing and Urban Development and the Office of Federal Housing Enterprise Oversight, for expeditiously reviewing this unique way for Freddie Mac to fulfill its mission to keep America's mortgage market strong, liquid and stable." Lender Groups Praise Freddie Mac For Safeguarding Liquidity in Gulf Coast "The effects of Hurricane Katrina have been devastating to the communities in the affected areas," said Camden R. Fine, president and CEO of the Independent Community Bankers of America. "Because access to liquidity is fundamental to helping the community banks and the communities rebuild the Gulf Coast, the ICBA applauds Freddie Mac for leading the way with this program." "Freddie Mac is to be commended for using its considerable resources to initiate this relief effort," said Diane Casey-Landry, president and CEO of America's Community Bankers. "This demonstrates Freddie's commitment to fulfill its charter mission to provide liquidity and stability to the mortgage markets. ACB encourages the banking regulators, government agencies and others to demonstrate similar flexibility as we all pitch in to help the victims of Hurricane Katrina on their road to recovery." Today's announcement applies specifically to mortgages that met Freddie Mac's Seller/Servicer Guide requirements when they were originated and are backed by properties in federally declared major disaster areas where FEMA's Individual Assistance program is available for Hurricane Katrina victims. How Hurricane Katrina Pipeline Offer Works Under this new short-term policy, Freddie Mac is requiring recourse on mortgages when the Seller/Servicer is unable to represent and warrant the value, condition and marketability of the mortgaged property under Freddie Mac's Guide requirements or, for properties located outside of FEMA special hazard areas, that such properties have not sustained uninsured flood damage. However, Freddie Mac will cancel the recourse if the Seller/Servicer can provide the missing assurances within three years. Regarding pipeline mortgages backed by investment properties, Freddie Mac is requiring rent loss insurance for at least six months of gross monthly rent. All purchases of Katrina pipeline mortgages will be made under a special negotiated contract. For more information, Seller/Servicers should contact their Account Manager or call 1-800-FREDDIE. Today's announcement builds on Freddie Mac's other efforts to assist Gulf Coast families and communities. Since Hurricane Katrina struck, Freddie Mac has adopted emergency policies that effectively suspend mortgage collections from many single and multifamily borrowers affected by the storm for 90 days, assure forbearance for National Guard involved in Katrina recovery operations and joined with the Freddie Mac Foundation to donate $10 million to hurricane relief organizations. Freddie Mac is a stockholder-owned company established by Congress in 1970 to support homeownership and rental housing. Freddie Mac fulfills its mission by purchasing residential mortgages and mortgage-related securities, which it finances primarily by issuing mortgage-related securities and debt instruments in the capital markets. Over the years, Freddie Mac has made home possible for one in six homebuyers and nearly four million renters in America. http://www.freddiemac.com/ DATASOURCE: Freddie Mac CONTACT: Brad German of Freddie Mac, +1-703-903-2437 Web site: http://www.freddiemac.com/

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