Freddie Mac announced today a new system to automate the assessment of borrowers without credit scores, provided they have payment references, including records showing timely housing payments.
The new automated system is by Loan Product Advisor® and it will begin in June. It is designed for people who have no credit such as young adults and first-time home buyers so they may be eligible for purchase mortgages or no-cash-out refinance transactions on one-unit owner-occupied homes.
Loan Product Advisor® will evaluate these borrowers based on Freddie Mac’s credit requirements and provides feedback on the credit risk of each loan.
Freddie Mac already allows lenders to manually underwrite home loans to borrowers without credit scores. By allowing automated assessments, lenders can serve more potential homebuyers more efficiently and with greater certainty that the loan will be purchased by Freddie Mac.
“We’re committed to supporting responsible lending and improving access to credit for all borrowers, including first-time home buyers, low- and moderate-income buyers and underserved populations,” said David Lowman, executive vice president of Freddie Mac’s Single-Family Business. “It’s important that we keep pace with the evolving needs of the U.S. market and help support sustainable homeownership.”
“By allowing lenders to more easily assess their overall underwriting risk, we encourage them to take advantage of our entire credit box to originate more loans in a safe and secure manner,” Lowman noted.
For more information, visit the Freddie Mac Loan Advisor Suite page.