A new way to assess credit eligibility | Blend

Blend’s work with Freddie Mac and Fannie Mae: A new way to assess credit eligibility

Blend is one of the few approved asset data service providers helping lenders implement the use of asset data for credit eligibility, reducing the red tape and creating more homeownership opportunities.

Within the past couple of months, both Freddie Mac and Fannie Mae (the GSEs) introduced new underwriting innovations that will help lenders qualify more low- and moderate-income borrowers in underserved communities. Both enhancements use a borrower’s asset data to identify a history of positive monthly cash flow — Freddie Mac’s program is applicable to loans where at least one borrower has a credit score, while Fannie Mae’s program applies to loans where no borrower has a credit score. This allows lenders to use information in addition to FICO® credit scores to help provide financing to more people.

As a longtime partner of Freddie Mac and Fannie Mae and one of the few approved asset data service providers, Blend enabled access to these tools as soon as they were released.

Vice President of Single-Family Client Engagement of Freddie Mac, Kevin Kauffman, said “We’re proud to partner with Blend to help expand the dream of homeownership to even more people.” Similarly, Senior Vice President Single-Family Analytics and Modeling of Fannie Mae, Steve Holden, said “This enhancement will improve a lender’s ability to assess a group of borrowers who have traditionally been underserved by the market.”

“We’re proud to partner with Blend to help expand the dream of homeownership to even more people.”
Kevin Kauffman
Vice President of Single-Family Client Engagement, Freddie Mac

Reducing the loan lifecycle for more borrowers

Leveraging asset data to assess borrowers who may not qualify for home financing through traditional means opens up the opportunity for homeownership for many more people. 

“Using asset data to help lenders assess a borrower’s credit eligibility,” says Kauffman, “we’re aiming to help those in underserved communities and low- and moderate-income homebuyers who may not qualify based on traditional methods of underwriting.” 

Instead, using asset data includes analyzing other means of positive income history including direct deposit of income and monthly bill payments like rent, utilities, and auto payments.

“With asset data,” states Holden, “borrowers who may have been unable to obtain a mortgage will now have the opportunity to qualify based on other factors that provide a more holistic view of how they manage their money.” 

In addition to helping more people get home financing, the process to do so may be shortened. Since these enhancements take advantage of data that’s already available within Blend, there are no extra steps for lenders to take in order to qualify their borrowers. And these capabilities are already included in Blend’s Mortgage Suite — ready to use right away. 

“With asset data, borrowers who may have been unable to obtain a mortgage will now have the opportunity to qualify based on other factors that provide a more holistic view of how they manage their money.” 
Steve Holden
Vice President Single-Family Analytics and Modeling, Fannie Mae

What Blend is doing today

The enhancements from both Freddie Mac and Fannie Mae leverage the asset verification services that are already a part of Blend’s suite of products. Blend customers are able to access an extended history asset report and take advantage of GSE programs, including Freddie Mac’s Loan Product Advisor® asset and income modeler (AIM), direct deposit income and employment verification, positive cash flow, and rental payment analysis, and Fannie Mae’s Desktop Underwriter ® (DU®) validation service for borrower’s income, employment and asset information, positive rental payment history, and cash flow analysis.

Since Blend’s conception, we’ve developed products and solutions to make the mortgage underwriting process easier. This includes relying on nontraditional consumer data to evaluate creditworthiness for borrowers who may have more unique circumstances.

Continuing to move forward

As the GSEs continue their work to improve access to mortgage financing, Blend is dedicated to being a supportive partner to help make even greater strides in the mortgage industry.