Financial Freedom Joins Lehman Brothers Bank

Business Wire, Oct 15, 2001

Business Editors

IRVINE, Calif.--(BUSINESS WIRE)--Oct. 15, 2001

Financial Freedom, the nation's largest lender and servicer of reverse mortgages, announced today that the Company has become a subsidiary of Lehman Brothers Bank, FSB, a federally chartered savings bank regulated by the Office of Thrift Supervision.

Lehman Brothers Bank is a wholly owned subsidiary of Lehman Brothers Holdings, the global investment bank which acquired Financial Freedom on March 1, 2001.

The move gives Financial Freedom immediate federal licensing to offer the FHA insured HECM loans, Fannie Mae sponsored HomeKeeper loans, and the Company's proprietary Cash Account loans in all 50 states. The relationship enables Lehman Brothers to incorporate reverse mortgages into the portfolio of products and services currently offered by Lehman Brothers Bank, including jumbo and conventional mortgages, CDs and online banking.

"Lehman Brothers Bank is excited to have the opportunity to speed the development and widespread distribution of an important public purpose mortgage product designed specifically to better the lives of America's senior citizens," said Jacqueline A. Frommer, president of Lehman Brothers Bank. "Given Lehman Brothers' strong reputation as a leader in the mortgage marketplace, the Firm's participation will provide further credibility and a much needed secondary market initiative to ensure access to, and the competitive pricing of, reverse mortgages."

"Lehman Brothers Bank's entry into the reverse mortgage business is a solid endorsement," said James R. Mahoney, CEO of Financial Freedom. "The Lehman name offers valuable brand recognition among consumers, and the Firm's resources will enable Financial Freedom to develop innovative product features while enhancing our ability to serve our customers."

A reverse mortgage is a unique loan that enables senior homeowners to convert part of the equity in their homes into tax-free income without having to sell the home, give up title, or take on a new monthly mortgage payment. Reverse mortgages are available to individuals 62 or older who own their home. Funds obtained from the reverse mortgage are tax-free.

Borrowers can choose to receive the reverse mortgage funds as a lump sum, monthly income (for up to life), or line of credit, or as a combination of monthly income and line of credit. No mortgage payments are due during the life of the loan. Borrowers can use the funds anyway they wish - for home repairs and improvements, medical costs, in-home care, education, and supplemental retirement income. The loan becomes repayable when the borrower sells the home or permanently moves out. In addition, the repayment amount can't exceed the value of the home.

Financial Freedom sells all three products currently available in the market. The most popular is the Home Equity Conversion Mortgage (HECM), which is insured by the Federal Housing Administration, an arm of the U.S. Department of Housing and Urban Development (HUD). More than 40,000 HECMs have been made since 1989. Financial Freedom's Cash Account is designed for higher value homes. Fannie Mae offers an alternative product called the HomeKeeper.

Financial Freedom is a founding member of the National Reverse Mortgage Lenders Association. NRMLA is a nonprofit trade association, based in Washington, DC, whose mission is to support the continued evolution of reverse mortgages as an important financial option for senior homeowners while educating both its members and consumers about the varied applications of this unique loan. Members sign a Code of Conduct pledging to abide by guidelines that assure fair, ethical, and respectful practices in offering and making reverse mortgages to seniors. For more information, visit the NRMLA Web site at www.reversemortgage.org.

Financial Freedom Senior Funding Corporation, based in Irvine, California, is the largest originator of reverse mortgages in the United States. Financial Freedom originated $525 million of home value in reverse mortgages in 2000 including business purchased from Unity Mortgage. Together, the two companies have made more than 12,000 reverse mortgage loans totaling more than $2 billion in home value. Financial Freedom is now the largest servicer of reverse mortgages with a servicing portfolio of approximately 18,000 loans. In 1999, Lehman Brothers, on behalf of Financial Freedom, underwrote the first U.S. securitization of a reverse mortgage portfolio.

Additional information on the Company and its products is available through www.financialfreedom.com, which provides an interactive reverse mortgage calculator helpful in determining the amount of money a borrower could receive based on current home value, locale, age and outstanding mortgages. The software that powers the calculator was the first to meet AARP's specifications for comparing reverse mortgages.

Lehman Brothers Bank, FSB is a subsidiary of Lehman Brothers, the global investment bank. The Bank provides a full range of community banking services to individuals in Delaware, as well as consumer financial services and products, such as mortgage and deposit products, to high-net-worth clients. Headquartered in Delaware, the Bank is expanding its capabilities through the Internet to provide banking services nationally, and plans to offer its products through strategic partnerships with retail and financial organizations throughout the country. Additional information on Lehman Brothers Bank and it's services can be found by visiting its website at www.lehmanbank.com.