Lending, Mortgage, Open Banking
They apply and you verify, in real time. Open banking elevates the mortgage experience
Give consumers a priceless asset: more time. Endless errands, work tasks and countless obligations big and small chip away at their free time and fill their schedules. Applying for a loan shouldn’t add to that.
To power a faster, better mortgage experience for consumers, Freddie Mac’s Loan Product Advisor asset and income modeler (AIM) continues to evolve, now including paystub data in addition to direct deposit data for income assessment. These cost-saving efficiencies provide increased rep and warrant coverage while continuing to meet Freddie Mac’s strong credit underwriting standards.
Open banking drives new mortgage capabilities
Using consumer-permissioned data from trusted third-party providers like Mastercard (with some services delivered through Finicity, a Mastercard company), direct deposit plus paystub increases the confidence in income calculations by matching digitized paystub data to borrower direct deposit history sourced from trusted providers.
Mortgage Verification Service (MVS) supports this new AIM capability by providing direct deposit transaction data paired with digitized paystub data to fuel this innovative, data-driven approach. It identifies the income stream that matches the paystub, delivering accurate risk assessment results.
Assets, income and employment verifications are vital to mortgage lenders looking to verify borrowers’ finances. However, between unreliable results, miscommunications and paperchases, verifying assets, employment and income can be cumbersome. MVS helps borrowers get faster approvals with fewer conditions up front, allowing them to close and move into their homes faster.
“Partnering with Mastercard ensures we can deliver the best tools and insights the industry has to offer. This collaboration will assist lenders with quickly and easily obtaining income verification.”
Daniel Miller, Freddie Mac Single-Family Director of Strategic Technology Partnerships
MVS can help lenders:
- More easily assess borrower capacity/automate income calculations
- Reduce frustrations caused by paper submissions and re-asking for documentation to verify assets, income and employment
- Remove subjectivity and manual errors in processing and underwriting
- Lower risk and probability of fraudulent activity
- Increase referrals by providing a better borrower experience
Efficient assessment
AIM leverages consumer-permissioned data from open banking providers like Mastercard to better identify pay deposits using accurate and verifiable data that meets Freddie Mac’s underwriting standards. Lenders can automate the manual processes of assessing borrower assets, income and employment. This can improve the success rates for identifying income and employment by reading information provided on a paystub and verifying income transactions within a borrower’s bank account.
“Partnering with Mastercard ensures we can deliver the best tools and insights the industry has to offer,” said Daniel Miller, Freddie Mac Single-Family Director of Strategic Technology Partnerships. “This collaboration will assist lenders with quickly and easily obtaining income verification.”
How it works
Previously, direct deposits to a consumer’s bank account would qualify for rep and warrant assessment. With enhanced direct deposit and paystub capabilities, a borrower or a loan officer can upload a paystub and the technology will match the data on that paystub with the deposits from the borrower’s asset report, boosting the rep and warranty success rates and income gross-up.
The asset report can include 24 months of direct deposit transactional history and also includes income streams identified by the open banking platform. Now, with the added paystub capability, Mastercard can add a paystub report that can provide greater success assessing income through direct deposits.
The paystub report generated through MVS has two sections; the top section includes digitized paystub information. The bottom section is up to 24 months of income stream credit transactions only. These income streams are reconciled with the deposits shown on the asset report.
As an added bonus, the reduced cost of implementing MVS is reflected directly in the balance sheet. On average, up to 7 days can be cut off the processing time for each loan. The hours formerly spent by loan officers chasing down borrower documents are invested in higher-return work activities such as marketing and sales to drive additional loans. The new AIM capability will be available to Freddie Mac-approved Sellers using Loan Product Advisor beginning June 7, 2023. MVS is available via direct integration and ecosystem integrations including SimpleNexus & ICE Technology and Order Reports Service in the Client Hub today.
Want to elevate your efficiency while enhancing the customer lending journey? Get started today.