Fannie Mae opts to use database for those without credit score
Fannie Mae will no longer require physical pay stubs and tax data to verify a borrowers’ ability to handle a loan, according to The Wall Street Journal. Instead, Fannie will use employment and income information from a database maintained by credit bureau Equifax to verify a borrower’s ability to handle a loan.
This change is part of a series of changes Fannie Mae and Freddie Mac have made in order to broaden access to mortgages for low income borrowers, and those who do not have a credit score.
Previously, lenders would have to manually determine a borrower’s eligibility if they did not have a Fair Issac Corp. credit score, as opposed to the automated system that handles borrowers with credit scores. This opened lenders up to liability issues, along with being a time consuming process.
Other changes Fannie has made include loosening mortgage standards and reworking their HomeReady affordability program to better suit minority households. Additionally, Freddie Mac suggested they would be willing to buy loans with 3 percent down payments.