US Mortgage Giants Relax Credit Score Requirements

In a significant shift in their lending policies, Fannie Mae and Freddie Mac have decided to drop the credit score requirement for some mortgage loans. This move is expected to make it easier for borrowers with limited credit history to qualify for mortgages. The decision was made after the Federal Housing Finance Agency (FHFA) directed the two entities to reassess their credit scoring models. The new policy will allow lenders to use alternative methods to evaluate the creditworthiness of borrowers. This change is likely to benefit first-time homebuyers and low-income borrowers who may not have a traditional credit history. Fannie Mae and Freddie Mac provide financing for a significant portion of the US mortgage market, and their policies have a substantial impact on the housing industry. The relaxation of credit score requirements is seen as a positive development for the US housing market, which has been experiencing a slowdown in recent months. The move is also expected to increase access to credit for underserved communities. However, some experts have raised concerns that the new policy could lead to a higher risk of defaults and delinquencies. The FHFA has assured that the new policy will not compromise the safety and soundness of the mortgage market. The agency has also emphasized that lenders will still be required to conduct thorough risk assessments and verify the income and employment of borrowers. The change in policy is part of a broader effort to expand access to credit and promote affordable housing. Fannie Mae and Freddie Mac have been working to implement new technologies and methods to evaluate creditworthiness, including the use of non-traditional credit data. The new policy is expected to take effect in the coming months, and lenders are already preparing to implement the changes. The US mortgage market is expected to experience significant changes in the coming years, and the relaxation of credit score requirements is just one of the many developments that will shape the industry. As the housing market continues to evolve, it is likely that we will see further changes to lending policies and regulations. The impact of the new policy will be closely monitored by regulators, lenders, and industry experts, and it is expected to have far-reaching consequences for the US housing market.

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