Great news for potential homebuyers, especially renters, people of color, and underbanked individuals with “low-or-no” FICO credit scores!
Beginning November 6, 2022, Freddie Mac will include a review of borrowers’ bank account data to identify a history of positive monthly cash-flow activity as part of its home loan purchase eligibility assessments. The announcement comes a few months after Freddie joined Fannie Mae in considering on-time rent payments as part of its underwriting platform.
This move is intended to increase homeownership opportunities via alternative credit data. It will be available to mortgage lenders through Freddie Mac’s automated underwriting system.
Freddie Mac says the review, after borrowers give permission, will enable lenders like Homeowners Financial Group to identify a year or more of cash-flow activity for inclusion in the tool’s credit risk assessment. Additionally, it can only positively affect that borrower’s assessment.
The data will come from checking, savings, and investment accounts, including those used for direct deposit of income and automatic monthly bill payments, such as rent, utilities, and auto loans.
*Validation of eligibility criteria may be required in accordance with Freddie Mac guidelines.
If you have questions, contact a Homeowners Licensed Mortgage Professional near you to learn more!