Freddie Mac will allow automated underwriting of borrowers who lack credit scores but have other financial records starting in June.
These borrowers will be eligible for underwriting through Loan Product Advisor if they are interested in purchase mortgages or no-cash-out refinances, and are getting loans on one-unit owner-occupied properties.
Lenders have been able to submit certain loans without scores to Freddie through a manual underwriting process using financial records such as rental payments, but automated underwriting by the government-sponsored enterprise has not been available.
"By allowing lenders to more easily assess their overall underwriting risk, we encourage them to take advantage of our entire credit box," said David Lowman, executive vice president of Freddie Mac's single family business, in a press release.
The Consumer Financial Protection Bureau estimates 45 million Americans lack traditional credit scores either because they have no credit history or because they lack enough credit history to generate a score using most models.
Fannie Mae began automatically underwriting certain
