Increased Opportunities for Homeownership
Source: Investment Zen (flickr)
Government-sponsored enterprise Freddie Mac is looking to incentivize responsible renters to buy homes. Freddie Mac started including timely rental payments in its underwriting process starting on July 10. The new underwriting process calls for 12 on-time monthly payments via eligible rent payment data such as checks, electronic transactions, or digital payments such as PayPal, Venmo, or Zelle. In the past, potential homebuyers with little to no credit or low credit scores were denied the opportunity to buy due to a lack of credit history. With this newly implemented process, it gives an opportunity for lower-income and younger buyers. Incidentally, Millennials and Generation Z make up the largest pool of homebuyers today.
Source: David (flickr)
This is not the first initiative Freddie Mac has implemented to help potential homebuyers achieve their goals. Last year Freddie Mac announced an initiative to help renters build credit. It encouraged multifamily properties to report timely rental payments to the three major credit reporting bureaus which includes Equifax, Experian, and TransUnion. Since this program went into effect, a little more than a third of enrolled renters saw an increase in their credit scores. In addition, Freddie Mac’s Credit Smart program offers a curriculum to explain the importance of credit and financial endeavors.