Tool Can Shorten Loan Processing by 15 Days?
February 17, 2022
Freddie Mac has a new “automated method” to analyze incomes based on direct deposits. Up to 93% of borrowers could see a quicker loan-process timeline.
WASHINGTON – Freddie Mac is launching an automated method for lenders to assess prospective borrowers’ income paid through direct deposits. The tool cuts down the amount of mandatory paper documentation and, Freddie says, that 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 income made by direct deposits into their accounts. More than 93% of U.S. workers are paid by direct deposit, according to the American Payroll Association.
The tool also can assess an applicant’s income from employer data and review tax return data for self-employed individuals.
A Freddie Mac study recently showed that lenders using such tools can shorten average cycle times for processing loan requests by up to 15 days.
“Our direct deposit solution is an innovative, data-driven approach that takes minutes, not days, to assess income so our clients can serve more borrowers more efficiently,” says Matt Vincent, Freddie Mac’s single-family vice president of credit and capacity. “Sourcing data directly from the mortgage applicant’s bank account increases accuracy, removes subjectivity, reduces manual underwriting errors and delivers a better experience for borrowers and lenders.”
Source: Freddie Mac
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