Freddie expands digital underwriting capabilities

Orrick, Herrington & Sutcliffe LLP
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On May 22, Freddie Mac announced new capabilities allowing lenders to use a borrower’s digital paystub data when assessing income paid through direct deposit. Lenders will be able to access the enhancements to Freddie’s automated income assessment tool through the Loan Product Advisor (LPA) asset and income modeler (AIM). Freddie noted that in addition to providing access to direct deposit data, AIM is also able to “assess income from tax return data for self-employed borrowers as well as bank account data to identify a history of positive monthly cash flow activity” to help first-time homebuyers and borrowers in underserved communities who may not qualify through traditional methods of underwriting. AIM is also designed to notify lenders when submitting this type of account data may benefit a borrower. The new AIM capability will be available beginning June 7 to Freddie-approved sellers that use LPA.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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