Reserve Fund Announced That Could Spur $100 Million in Home Renovations in New Orleans

Freddie Mac, City of New Orleans, LHFA Invest $4.5 Million

NEW ORLEANS, Oct. 22 /PRNewswire-FirstCall/ — Freddie Mac (NYSE: FRE), in collaboration with the Louisiana Housing Finance Agency (LHFA) and the City of New Orleans, is establishing a $4.5 million home renovation reserve fund to help remove obstacles to renovating hurricane-damaged homes. This infusion of capital is expected to jumpstart $100 million in renovation mortgage activity over two years in selected neighborhoods in New Orleans and the City of Lake Charles with participating lenders Chase, Countrywide Home Loans and Standard Mortgage. Rebuild New Orleans is one of the largest collaborative efforts to establish scalable home renovations in specific neighborhoods.

Freddie Mac is investing $1.5 million in the renovation reserve fund, which is being matched by LHFA and the City of New Orleans. The fund will be used for unexpected cost over-runs in the renovation that can’t be paid from mortgage proceeds. The announcement was made as more than 100 Freddie Mac employees from across the country kicked off a weeklong project to renovate homes in New Orleans’ Broadmoor neighborhood, one of four areas eligible to receive funds. The others are Gentilly, Ponchatrain Park and the City of Lake Charles.

Today’s Rebuild New Orleans announcement builds on Freddie Mac and the Freddie Mac Foundation’s June commitment to help renovate New Orleans housing and provide resident services for many low- to moderate-income renter families who are still trying to rebuild their lives following the 2005 hurricanes. Freddie Mac’s $1.5 million contribution to the renovation reserve fund is part of this previously announced $5 million commitment.

This new Rebuild New Orleans initiative is designed to help individuals and families return to their homes and assist new homebuyers by providing flexible mortgage financing, expert construction oversight services and free homebuyer education.

“The creative new Rebuild New Orleans initiative will help facilitate large-scale renovation projects that are needed in New Orleans,” said Paul Mullings, senior vice president of Freddie Mac. “We worked with lenders and local organizations to address a need, identify neighborhoods and develop a solution to increase much-needed housing and revitalization. We are proud to facilitate the development of this fund, which addresses the acute need for livable housing.”

“We look forward to working with Freddie Mac and the city of New Orleans on this initiative,” said Milton Bailey, president of the Louisiana Housing Finance Agency. “This is a best practices model that could become a solid state-wide rehabilitation program for homeowners with storm-damaged properties. Thanks to the vision of the Housing Trust Fund Advisory Group and LHFA Board of Directors, we are able to immediately put our Trust Fund dollars to work for homeowners desperately looking forward to coming home. This revolving funds mechanism will allow us to get much more mileage out of each trust fund dollar.”

With this effort, borrowers can conveniently pay for property renovation as part of a refinance of an existing mortgage, or finance a new home with a purchase/renovation mortgage from the participating lenders. The mortgage loan amount will include funds to pay up to six months of mortgage payments during the renovation period.

Borrowers would include current homeowners who wish to return to renovate their homes or new homebuyers who wish to purchase and renovate a property. The new initiative would be particularly helpful to homeowners who are now receiving their insurance proceeds and Road Home grants, and are unsure of how to proceed to repair their homes.

As part of this effort, Neighborhood Housing Services, a local nonprofit with extensive neighborhood rehabilitation/construction management experience, will work with the borrower free of charge to provide these services:
— prepare a detailed work specification for renovations, which includes
scope of work and cost estimates that lenders require before making
loans;
— help borrowers select qualified contractors;
— provide renovation oversight and inspection;
— work with the borrower to authorize payments to contractors from the
loan proceeds held by the lender; and
— offer homebuyer education so the borrower can make the best use of
insurance proceeds and Road Home funds.
Freddie Mac is making an additional $250,000 grant to local organizations, including Neighborhood Housing Services, for construction monitoring, inspection, homebuyer education and other activities.

Enterprise Community Partners will administer the renovation reserve fund. Individuals should call 1- 87-REHAB-IT-4 (1-877-342-2484) for more information. Lenders can access the fund when construction renovation costs are higher than expected, and/or additional funds are needed to complete the renovation.

About Freddie Mac

Following Hurricanes Katrina and Rita, Freddie Mac and the Freddie Mac Foundation donated more than $16 million in humanitarian assistance, with special emphasis on finding temporary or permanent housing for displaced families — including foster families. The company also provided mortgage payment and other relief to affected homeowners as well as made a $1 billion investment in state and local mortgage revenue bonds, funding housing for as many as 10,000 families. In addition, the company provided temporary or permanent housing for more than 2,100 families.

Freddie Mac is a stockholder-owned corporation established by Congress in 1970 to support homeownership and rental housing. Freddie Mac purchases single-family and multifamily 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 more than 50 million times, ensuring financing for one in six homebuyers and more than four million renters. For additional information about Freddie Mac, visit: http://www.FreddieMac.com.

Additional Quotes from Participants:

“We are supporting the resilient people of New Orleans as they rebuild their great city,” said John Kallenborn, president of the New Orleans region for Chase.

“We at Standard Mortgage appreciate Freddie Mac’s continued commitment to the revitalization of our community,” said Edgar Bright, president and CEO of Standard Mortgage.

“Enterprise is pleased to manage the renovation reserve fund and appreciates the trust of Freddie Mac, the Louisiana Housing Finance Agency and the City of New Orleans in our capacity to manage the fund efficiently and effectively,” said Doris W. Koo, president and chief executive officer of Enterprise Community Partners. “We look forward to working with Neighborhood Housing Services, participating lenders and homeowners to achieve energy efficiency and other environmental benefits in home renovations on a cost effective basis through this initiative.”

“We are thrilled to participate in this ground breaking program, and look forward to being a part of what will hopefully serve as a catalyst for additional investment in the ongoing rebuilding effort,” said David Greco, vice president of Credit Policy, Mortgage Guaranty Insurance Corporation.

SOURCE Freddie Mac

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