Freddie Mac Takes Further Action to Help Renters Achieve Homeownership  

Rhea-AI Summary

Freddie Mac (OTCQB: FMCC) has announced an initiative to enhance homeownership access for first-time buyers by integrating on-time rent payment histories into its loan purchase decisions, effective July 10, 2022. This new feature, available via the Freddie Mac Loan Product Advisor, aims to assist renters with limited credit histories. Borrowers can authorize lenders to submit their bank data, reflecting a year of on-time rent payments, enhancing their eligibility for loans. This move supports Freddie Mac’s commitment to improving credit access, particularly in underserved communities.

Positive

• Integration of on-time rent payments into loan purchase decisions can increase homeownership opportunities for first-time buyers.
• The initiative targets underserved communities by addressing the needs of renters with limited credit history.
• More than 70,000 households have enrolled in Freddie Mac's previous initiative to build credit through reported rent payments.

Negative

• None.

Company will factor on-time rent payments into loan purchase decisions

MCLEAN, Va., June 29, 2022 (GLOBE NEWSWIRE) -- Freddie Mac (OTCQB: FMCC) announced that it will increase homeownership opportunities for first-time homebuyers by considering on-time rent payments as part of the company’s loan purchase decisions. Beginning July 10, 2022, this automated functionality will be available to mortgage lenders nationwide through Freddie Mac Loan Product Advisor^® (LPA), the company’s automated underwriting system.

“This extremely important initiative will help many renters move closer to achieving the dream of homeownership,” said Michael DeVito, CEO of Freddie Mac. “Millions of American adults lack a credit score or have limited credit history. 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.”

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 through LPA asset and income modeler (AIM). Eligible rent payment data includes check, electronic transactions or digital payments made through Zelle, Venmo or PayPal.

These automated capabilities provide greater efficiencies to lenders and allows them to deliver a better borrower experience while continuing to meet Freddie Mac’s strong credit underwriting standards.

“One of the first steps to purchasing a home is a positive credit history, and Freddie Mac is committed to helping consumers achieve that goal,” said Mike Hutchins, Freddie Mac President. “Our enterprise-wide approach already includes programs to help consumers understand credit and initiatives to assist renters with building and improving their credit scores. Factoring on-time rent payments into our automated underwriting system will help create even more opportunity for families across the nation.”

Last year, Freddie Mac announced an initiative to help renters build credit by encouraging operators of Freddie Mac-financed multifamily properties securing its loans to report on-time rental payments to the three major credit-reporting bureaus. Since Freddie Mac began this initiative, 70,000 households across more than 816 multifamily properties have been enrolled. More than 15,000 new credit scores have been established, and 67% of renters with an existing credit score saw their scores increase.

Additionally, the Freddie Mac CreditSmart^® financial capability curriculum helps consumers learn about the importance of building, maintaining and using credit so they can take the reins on their financial futures. Over the past two decades, more than five million consumers at various life stages have benefitted from CreditSmart’s financial education, which is available at no cost.

Additional requirements for submitting rent payment data to LPA will be announced in an upcoming July Single-Family Seller/Servicer Guide Bulletin. Initial designated service providers supporting Freddie Mac’s automated rent payment capability include Blend, Finicity (a Mastercard Company), FormFree and PointServ. Freddie Mac’s privacy policy is available online.

About Freddie Mac
Freddie Mac makes home possible for millions of families and individuals by providing mortgage capital to lenders. Since our creation by Congress in 1970, we’ve made housing more accessible and affordable for homebuyers and renters in communities nationwide. We are building a better housing finance system for homebuyers, renters, lenders, investors and taxpayers. Learn more at FreddieMac.com, Twitter @FreddieMac and Freddie Mac’s blog FreddieMac.com/blog.

MEDIA CONTACT: Chad Wandler
703-903-2446
Chad_Wandler@FreddieMac.com

FAQ

What is Freddie Mac's new initiative involving on-time rent payments for FMCC?

Freddie Mac's initiative will include on-time rent payments in loan purchase decisions to enhance homeownership opportunities for first-time buyers.

When will Freddie Mac start considering rent payments in loan decisions?

Freddie Mac will begin this initiative on July 10, 2022.

How does the new loan purchase decision process work for FMCC?

Lenders can submit a borrower's bank account data that shows 12 months of on-time rent payments to assess purchase eligibility.

What is the aim of Freddie Mac's new rent payment consideration?

The aim is to help renters, particularly in underserved communities, achieve homeownership by using their rental payment history.

How many households have benefited from Freddie Mac's rent payment reporting initiative?

More than 70,000 households have enrolled in Freddie Mac's initiative that encourages reporting on-time rental payments.