Freddie Mac has launched a new pilot lending program with two non-bank lenders that eases the income and documentation requirements that come with a standard mortgage application.
The idea is to help fuel more mortgage applications from first-time buyers, who often find they’re unable to meet the more stringent requirements of banks due to lower incomes. The Wall Street Journal adds that Freddie Mac wants to better reach those living in under-served areas.
The pilot program allows mortgage applicants to include the income of other people who live with them, but who won’t be named on the mortgage themselves. In addition, income from second jobs will also be taken into consideration, even if they’ve only been doing that job for a short period of time. Borrowers will need to produce bank statements showing that they’ve saved enough for a down payment.
The pilot program does not lower down payment or credit score requirements.
Fannie Mae is already trialing a similar program, but the loosened standards are a first for Freddie Mac.
The program came into being on Monday, and will be offered to mortgage applicants via Las Vegas-based Alterra Home Loans, and Trustin, Calif.-based New American Funding for the next 12 months. Following that trial period, Freddie Mac will then decided whether or not to expand the program further.