Freddie Mac to accept rent payment history in mortgage application process
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It won't make a home purchase any less expensive, but some first-time home buyers may have an easier time of getting approved for a mortgage through the Freddie Mac Loan Product Advisor ("LPA") automated underwriting system.
Beginning July 10, 2022, Freddie Mac (OTCQB:FMCC) will consider on-time rent payments as part of its loan purchase decisions. "By factoring in a borrower's responsible rent payment history into our automated underwriting system, we can help make home possible for more qualified renters, particularly in underserved communities," said Freddie Mac CEO Michael DeVito.
With the borrower's permission, lenders and brokers can submit bank account data for LPA to identify 12 months of on-time rent payments for inclusion in the tool's assessment of purchase eligibility.
The bank account data is obtained from designated third-party service providers using the same automated process used to verify assets, income, and employment throgh LPA asset and income modeler. Eligible rent payment data includes check, electronic transactions, or digital payments made through Zelle, Venmo, or PayPal (PYPL).
In 2019, Fannie (OTCQB:FNMA) and Freddie (OTCQB:FMCC) announced plans to accept some credit score alternatives.