Freddie Mac Improves Digital Tool to Document Homebuyer Income


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 pay stub data. This detailed information can help lenders calculate income faster and more precisely to improve loan quality, simplify the mortgage process and expand access to credit.

The new ability to include pay stub 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). AIM for income using direct deposit provides these cost-saving efficiencies while continuing to meet Freddie Mac’s strong credit underwriting standards.

“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,” says Kevin Kauffman, single-family vice president of seller engagement at Freddie Mac.

Process automation is especially beneficial for documenting income, both in the collection and assessment process. That’s vitally important because income verification issues account for nearly one-third of all purchase transaction defects.

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.

This new AIM capability will be available to Freddie Mac-approved Sellers using Loan Product Advisor in early June. Finicity, a Mastercard Company, is the initial service provider supporting Freddie Mac’s AIM for income using direct deposits plus pay stub.

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