FormFree today announced that mortgage lenders will be able to use AccountChek® to help more lenders qualify more borrowers for home financing as a result of a recently announced Freddie Mac initiative that analyzes loan applicants’ account transaction data as part of its automated underwriting system, Loan Product Advisor® (LPA℠). AccountChek users will be able to take advantage of LPA’s enhancement when it goes live on November 6, 2022.
“By incorporating borrowers’ cash flow assessments into its purchase eligibility assessment, Freddie Mac is helping lenders confidently provide a more inclusive path to homeownership within the communities they serve,” said FormFree Founder and CEO Brent Chandler. “This additional assessment will also be beneficial to underserved communities and first-time homebuyers, who may have the financial means to support homeownership but have been unable to attain financing with existing automated risk tools.”
When mortgage loan applicants authorize AccountChek to electronically fulfill verification of asset (VOA) reporting requirements, LPA assesses transaction data from checking, savings and investments accounts to identify positive monthly cash flow patterns. The cash flow assessment is only used to positively affect loan applicants’ credit risk assessments; it does not negatively impact applicants’ credit risk assessments. To help lenders increase access to home financing for more borrowers, LPA will notify lenders of loan files that do not have an electronic VOA report and could benefit from a cash flow assessment.
FormFree has long been a proponent of leveraging consumers’ direct-source financial data to better assess their ability to repay loans. FormFree independently developed its Residual Income Knowledge Index™, known as RIKI™ (RIH-kee), which measures consumers’ Ability-to-Pay (ATP®) for mortgages and other loans based on monthly income and spending. In July, Guild Mortgage introduced its Complete Rate lending program, which leverages RIKI to provide a more inclusive path to homeownership. In October, FormFree made RIKI available to lenders nationwide.