Freddie Mac has enhanced its automated income assessment tool that allows lenders to assess a homebuyer’s income paid through direct deposit to also include the borrower’s digital paystub data. This detailed information can help lenders calculate income faster and more precisely to improve loan quality, simplify the mortgage process and, most importantly, expand access to credit.
The new ability to include paystub data in addition to direct deposit data in the income assessment is available to mortgage lenders nationwide through Freddie Mac’s Loan Product Advisor (LPASM) asset and income modeler (AIM).
“Over the last year, we’ve consistently rolled out innovations to ensure our digital tools are improving speed and efficiency, reducing risk and, ultimately, helping us serve our mission by reaching more qualified borrowers,” said Kevin Kauffman, Single-Family VP of Seller Engagement at Freddie Mac. “Today’s innovation further automates income assessment by using historical direct deposit pay patterns and current gross income from recent paystubs, which can help more families achieve homeownership.
Freddie Mac digital tools and solutions offer lenders cost-effective ways to achieve quality control operations.
Recent analysis shows that loans originated by lenders leveraging Freddie Mac’s automated offerings are four times less likely to produce defects than loans without these technology offerings. Process automation is especially beneficial for documenting income, both in the collection and assessment process.
In addition to direct deposit data, AIM can 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. This can include data from checking, savings, and investment accounts, including those used for direct deposit of income and monthly bill payments, such as rent, utilities and auto loans. That data can help first-time homebuyers and borrowers in underserved communities who may not qualify with traditional methods of underwriting. Additionally, account data submitted to assess cash flow can only positively affect a borrower's credit assessment. And to help identify opportunities, LPA will notify lenders when submitting this account data could benefit a borrower.