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Freddie Mac To Launch Direct-Deposit Assessment Tool

David Krechevsky
Feb 16, 2022
Freddie Mac logo

The new, automated assessment tool will help reduce paper documentation so loans can close faster.

Freddie Mac will launch a new, automated capability that allows mortgage lenders to assess a prospective homebuyer’s income paid through direct deposit, the enterprise said today.

The new assessment tool will help reduce the paper documentation burden on borrowers so they can close loans faster and simplify the lending process, Freddie Mac said.

The income assessment solution is available to mortgage lenders nationwide through Freddie Mac’s Loan Product Advisor (LPASM) asset and income modeler (AIM), the enterprise said. AIM for income using direct deposits provides these cost-saving efficiencies, while continuing to meet Freddie Mac’s strong credit underwriting standards, it said.

“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,” said Matt Vincent, Freddie Mac 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.”

With more than 93% of U.S. workers being paid by direct deposit, according to the American Payroll Association, AIM is now able to assess more income sources than ever. In addition to direct deposit data, with borrower permission, AIM can assess an applicant’s income from employer data as well as tax return data for self-employed individuals.

“We are thrilled to announce another first-of-its-kind solution to help bring greater loan origination efficiencies,” said Kevin Kauffman, vice president of client and partner delivery, Freddie Mac Single-Family. “Working alongside our partners, we’re offering tremendous value to our lender clients and their borrowers, while leading the industry on its digital journey to modernize the mortgage process.”

Freddie Mac said a recent study it conducted highlights how lenders, by adopting Freddie Mac Loan Product Advisor automated solutions (including AIM), were able to significantly boost efficiency and on average shorten cycle times by as much as 15 days. In addition, Freddie Mac said, these efficiencies translated into cost reductions, increased customer satisfaction and improved capacity and conversion pull-through rates.

The new AIM capability will be available to Freddie Mac-approved sellers using Loan Product Advisor. Additional requirements, and the effective date, will be announced in an upcoming March Guide Bulletin, Freddie Mac said. Initial service providers supporting Freddie Mac’s AIM for income using direct deposits include Finicity, a Mastercard company; FormFree, and PointServ.

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