Beginning June 10, Freddie Mac is extending to all of its mortgage products the benefits of using employer financial assistance as a source of funds; previously these benefits could only be used with the company's affordable mortgage products such as its pioneering Home Possible(R) suite of mortgages.

Freddie Mac's new Employer Assisted Homeownership Benefits policy will help more borrowers take advantage of a wide variety of different types of financial benefits employers may offer, including grants, unsecured loans or secured secondary financing that can supplement a downpayment, closing costs, financing costs, or pre-paids and escrows. The new policy was crafted so lenders and employers with housing benefit programs can help more working families achieve homeownership with Freddie Mac mortgage products regardless of borrower income or the location of the property.

Freddie Mac's policy change was made in a June 10 bulletin to the company's Seller/Servicer Guide that 12,000 lenders and mortgage brokers use to originate an estimated 10,000 Freddie Mac backed mortgages every day.

"We're extending our flexible employer assistance policies to all of our mortgage products both to underscore our Mission to boost homeownership opportunities and in response to our customers' requests to bolster the market for employer-assisted mortgages," said James Cotton, vice president of single family marketing at Freddie Mac. "We believe this change will encourage more lenders and employers to join forces and look for mutually beneficial opportunities to help working families become successful homeowners."

According to a recent Society of Human Resource Management survey the number of employers providing mortgage and downpayment assistance has grown 34 percent since 2003. The Society's 2004 survey estimates that nearly one out of eight employers in 2004 provided their staffs with some form of mortgage or downpayment assistance. Such benefits can help reduce turnover and enable more employees to live near their jobs.

Freddie Mac currently works with a number of national and local lenders and credit unions to support a wide range of homeownership initiatives offered by major employers such as Tyson Foods and Pittsburgh's Allegheny General Hospital.

New Rules For Employer Mortgage Assistance

Under Freddie Mac's new policy, secured and unsecured loans from employers can be used as a source of funds for a part of the downpayments and for closing costs, escrows/prepaids, and financing costs. Borrowers who use unsecured loans and secured secondary financing from their employer are able to maximize their buying power. That's because the debt payments on the employer loan can be excluded from the borrower's monthly housing expense-to- income or debt payment-to-income ratios if the loan repayments are delayed for five years or the loan is only repaid upon sale or in case of a default.

A key feature of Freddie Mac's new policy allows employers the flexibility to require repayment of the loan in full if the borrower terminates employment. However the employer must allow the borrower to continue repaying the loan in the event of long-term disability or his or her job's elimination through a reorganization or reduction-in-force.

Employer assisted homeownership benefits have been available for many years with Freddie Mac's affordable products and are a part of Freddie Mac's groundbreaking Home Possible(R) suite of affordable mortgage products. Designed to expand homeownership opportunities for borrowers with credit and downpayment issues, Home Possible offers low and moderate income borrowers and borrowers purchasing homes in underserved areas, special flexibilities to eliminate many barriers faced by these borrowers.

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 more than two million renters in America. (For more information about Freddie Mac, visit http://www.freddiemac.com/.)

Source: Freddie Mac

CONTACT: Brad German of Freddie Mac, +1-703-903-2437

Web site: http://www.freddiemac.com/