Freddie Mac takes steps to help tenants become homeowners
Freddie Mac says he will consider paying rent on time as part of the company’s loan purchase decisions in an effort to increase homeownership opportunities for first-time home buyers. Beginning July 10, this automated functionality will be available to mortgage lenders nationwide through Freddie Mac Loan Product Advisor (LPA), the company’s automated underwriting system.
“This hugely important initiative will help many tenants get closer to realizing their dream of home ownership,” said Michael DeVito, CEO of Freddie Mac. “Millions of American adults have no credit score or have a limited credit history. By factoring a borrower’s responsible rent payment history into our automated underwriting system, we can help make housing possible for more qualified tenants, especially in underserved communities.
With the borrower’s permission, lenders and brokers may submit bank account data for LPA to identify 12 months of one-time rent payments to be included in the lender’s purchase eligibility assessment. tool. Bank account data is obtained from designated third-party service providers using the same automated process used to verify assets, income and employment through the Asset and Income Modeler (AIM) LPA, according to Freddie. Mac. Eligible rent payment data includes checks, electronic transactions, or digital payments made through Zelle, Venmo, or PayPal.
According to Freddie Mac, additional requirements for submitting rent payment data to LPA will be announced in an upcoming newsletter. The first designated service providers to support Freddie Mac’s automated rent payment capability include Blend, Finicity, FormFree and PointServ.
“One of the first steps in buying a home is a positive credit history, and Freddie Mac is committed to helping consumers achieve that goal,” said Mike Hutchins, President of Freddie Mac. “Our company-wide approach already includes programs to help consumers understand credit and initiatives to help tenants build and improve their credit scores. Factoring on-time rent payments into our automated underwriting system will help create even more opportunities for families across the country.
Freddie Mace announced an initiative last year to help tenants build credit by encouraging operators of multi-family properties financed by Freddie Mac guaranteeing its loans to report rental payments on time to the three major credit reporting bureaus. . The company says 70,000 households in more than 816 multi-family properties have been enrolled since the initiative was launched, with more than 15,000 new credit scores established. According to Freddie Mac, two-thirds of renters with an existing credit rating saw their rating increase. The company’s CreditSmart financial capability program helps consumers understand the importance of building, maintaining and using credit.