Freddie Buying $40M in Recovery Bonds

In order to promote homeownership and recovery efforts in Mississippi's Hurricane Katrina disaster areas, Freddie Mac is purchasing $40 million of Mississippi Home Corp. bonds that will be used to finance mortgages with a 5.61% interest rate.The move, expected to help an estimated 350 borrowers, marks the first installment on Freddie Mac's commitment to fund up to $1 billion in below-market-rate mortgages for storm recovery in Mississippi and Louisiana. Freddie Mac is buying the bonds at a price that will enable MHC to make available an additional $1.2 million to cover 3 points of downpayment or closing cost assistance, which works out to an estimated $3,000 per borrower. The mortgages, which can be used to repair or purchase homes in federally designated storm disaster areas, are available on a first-come, first-served basis. "Because we are buying these tax-exempt mortgage bonds for our investment portfolio, we can safely price them so their rate is a quarter-point below market," said Patricia Cook, Freddie Mac's executive vice president of investments and capital management. A list of participating lenders can be found on MHC's website, at http://www.mshomecorp.com.