Fannie Mae's $2 Trillion 'American Dream Commitment' On Course with Over $190 Billion in 2000 Targeted Lending

Business Wire, March 14, 2001

Business Editors

WASHINGTON--(BUSINESS WIRE)--March 14, 2001

On First Anniversary of Commitment, CEO Raines Calls on Mortgage

Industry to Bring More Families into Mainstream Housing Finance

Fannie Mae Chairman and CEO, Franklin D. Raines said today that the company financed over $190 billion of home mortgages through its lender partners for nearly 2 million U.S. families most in need during 2000, the first year of the company's "American Dream Commitment" to increase homeownership rates and serve 18 million targeted American families by the end of the decade.

In addition to reporting on progress made on the $2 trillion initiative, Raines called on the mortgage industry to better serve families who have been underserved by mainstream housing finance.

"Fannie Mae and its affordable housing partners did not skip a beat as we completed our Trillion Dollar Commitment last spring and began making significant progress on our redoubled, $2 trillion American Dream Commitment," said Raines. "We are confident that we will meet our ambitious goals, but as in a marathon, the miles ahead will be harder. To all those with a stake in closing the homeownership gaps that still exist, Fannie Mae is asking for your help in breaking the barriers between underserved families and mainstream mortgage finance."

With the homeownership rate for minority and lower income families, women-headed households, new Americans and other groups still significantly lagging that of the general population, Fannie Mae launched the American Dream Commitment in March 2000 to narrow the homeownership gap.

The Commitment consists of a six-point plan: the Mortgage Consumer Rights Agenda; the National Minority Homeownership Initiative; the Opportunity for All Strategy; the America's Living Communities Plan; eHomeownership; and the Affordable Rental Housing Leadership Initiative.

"The American Dream Commitment goes well beyond our statutory housing goals and represents Fannie Mae's full embrace of its mission," said Raines.

Raines placed special emphasis on the first of the American Dream Commitment's six-point plan - the Mortgage Consumer Rights Agenda. A cornerstone of the Mortgage Consumer Rights Agenda - and the American Dream Commitment - is the company's pledge to protect consumers through its "Mortgage Consumer Bill of Rights."

Said Raines, "Our $2 trillion in capital and focused mortgage strategies alone will not close the homeownership gap - not when so many families and neighborhoods remain outside and out of reach of the mainstream financial system, where mortgage consumer rights can be protected better."

In 2000, Fannie Mae made great strides towards fulfilling the promise of the Mortgage Consumer Bill of Rights.

-- The Right to Equal Access to Affordable Mortgage Credit. Expanding mortgage
credit to underserved markets is not just a matter of fair lending - it's smart
business. Fannie Mae launched the Timely Payment Rewards(SM) (TPR) mortgage,
which makes homeownership more available to borrowers with past credit
difficulties who might otherwise be forced to seek alternative high cost
subprime financing. In 2000, the company invested $1.5 billion in TPR
mortgages. Fannie Mae also introduced the MyCommunityMortgage(SM) tool to help
lenders meet their Community Reinvestment Act (CRA) goals by enabling them to
choose from a suite of flexible mortgage options for low- to moderate-income
families.

-- The Right to the Lowest Cost Mortgage Possible. Fannie Mae is taking a
leading role in working with the mortgage industry to promote the principle
that borrowers should be offered the best terms for which they qualify, and
should not be "steered" to higher cost or less advantageous terms. The company
is working with partners on the state and national level to build "best
practice" models that others may emulate. For example, Fannie Mae, in
conjunction with local community groups and lenders, has launched a $5 million
anti-predatory refinance initiative to help Chicago families refinance bad
loans by abusive lenders.

-- The Right to Know the True Cost of a Mortgage. Consumers have a right to
know the true cost of the mortgage they are getting, including interest rate
and points, mortgage insurance costs, appraisal fees, title insurance fees, and
miscellaneous settlement charges. Fannie Mae has introduced and enhanced the
True Cost Calculator(SM) through its consumer Web site, www.homepath.com,
providing a free online tool to lenders and others to help consumers understand
and compare the costs of their mortgage options. The True Cost Calculator also
is available on 14 partner Web sites.

-- The Right to Be Free of Regulatory Burden. Fannie Mae is committed to
increase the supply of affordable housing by reducing regulatory barriers in
communities across America. The company's Initiative to Reduce Barriers to
Affordable Housing seeks to create local partnerships that reflect the diverse
needs of each community. Fannie Mae is working on regulatory barrier
initiatives in Detroit, Houston, Pittsburgh, Miami, the Bay Area, North
Carolina, Minneapolis, and Utah, and is serving as a clearinghouse of "best
practices" in the field of reducing unnecessary regulations.

-- The Right to Understand the Lender's Decision. With the launch of Desktop
Underwriter(R) 5.0 in July 2000, Fannie Mae opened the book on our automated
underwriting system and replaced credit scores provided by third parties with
specific credit characteristic taken directly from borrower's credit reports to
assess a borrower's credit history.