Fannie Mae Cuts Off HFC and Beneficial


Damage Control

September 30, 2004

Fannie Mae's decision that it will no longer buy or securitize
mortgage loans containing mandatory arbitration clauses means that
many Household International, HSBC, HSBC North America, HFC and
Beneficial customers no longer qualify.

Advocates say binding arbitration is a valuable tool for controlling
costs and ensuring speedy dispute resolution. Opponents say binding
arbitration takes away your rights under the justice system.

Fannie Mae will no longer help with predatory high risk loans like
those from Household Finance and Beneficial. Can anyone blame them?

Fannie Mae provides financial products and services that make it
possible for low-, moderate-, and middle-income families to buy homes
of their own. Since Fannie Mae began in 1968 we have helped more than
63 million families achieve the American Dream of homeownership.

The National Home Equity Mortgage Association does not agree with
Fannie Mae's decision.

NHEMA is the only trade association solely representing the non-prime
home equity lending industry. NHEMA represents approximately 250 home
equity lenders accounting for 80 percent of the $240 billion in
outstanding non-prime home equity loans. The association and its
members are committed to providing open and available access to credit
for all homeowners.

HSBC and HSBC North America (formerly the highly visible predatory
Household International) uses binding arbitration, as does Best Buy.
The NAF (National Arbitration Foundation) is currently being sued by
the State of California, and represents lenders and merchants.

NAF has been sued claiming they are not fair and favor the merchants,
from whom they derive the majority of their income. See Baron v. Best
Buy and NAF.

The thing to remember is if you go to HSBC you may be excluding
yourself from the mainstream, and your ability to sell your house may
be limited. Your ability to refinance away from the predators may be
impossible. Don't take a chance.

If shopping for a home loan or a cash out refinance on the Internet
BEWARE - Household, HFC, Beneficial and HSBC have different names,
many brokers, and they may buy your contract within 60 days. Be very,
very careful and use caution. I cannot stress that enough!


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