Freddie Mac has a new “automated method” for analyzing earnings based on direct deposits. Up to 93% of borrowers could benefit from faster loan processing times.
WASHINGTON — Freddie Mac is launching an automated method for lenders to assess the earnings of potential borrowers paid by direct deposit. The tool reduces the amount of paperwork required and, according to Freddie, it can close loans faster – up to 15 days faster in some cases.
Mortgage lenders nationwide should soon have access to the new tool, and it can be used, with the borrower’s permission, to assess the revenue generated from direct deposits in their accounts. More than 93% of American workers are paid by direct deposit, according to the American Payroll Association.
The tool can also estimate an applicant’s income from employer data and examine data from self-employed tax returns.
A Freddie Mac study recently showed that lenders using such tools can shorten average loan application processing times by up to 15 days.
“Our direct deposit solution is an innovative, data-driven approach that takes minutes, not days, to assess earnings so our customers can serve more borrowers more efficiently,” said Matt Vincent, vice-director. Single Family President of Credit and Capacity at Freddie Mac. “Getting data directly from the mortgage applicant’s bank account increases accuracy, eliminates subjectivity, reduces manual underwriting errors, and provides a better experience for borrowers and lenders.”
Source: Freddie Mac
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