Freddie Mac recently announced that it has expanded homeownership opportunities and access to credit for many Americans who do not currently have credit scores.
According to the GSE’s press release, it accomplished this by automating the assessment of borrowers without credit scores, provided they have payment references – including records showing timely housing payments.
“We are committed to supporting responsible lending and improving access to credit for all borrowers, including first-time home buyers, low-to-moderate-income buyers, and underserved populations,” said David Lowman (Freddie’s EVP of Single-Family Business) in the company’s press release. “It’s important that we keep pace with the evolving needs of the U.S. market, and help support sustainable homeownership.”
Freddie Mac already allows lenders to manually underwrite mortgage loans to borrowers without credit scores. With this recent update, however, lenders will now be able to use automated assessments, which will enable them to serve potential homebuyers more efficiently and with greater certainty that the loan will be purchased by the GSE.
Beginning in June, borrowers without credit scores will be eligible for purchase mortgages or no-cash-out refinance transactions on one-unit, owner-occupied homes. Loans will be reviewed by Freddie’s Loan Product Advisor®, which will evaluate them based on the GSE’s credit requirements and provide feedback on their overall credit risk.