Type
City
Zip
MLS #
Min price
Max price
Beds +
Baths +


Freddie Mac Eliminates Credit Score Requirements for Home Refinances

Freddie Mac Eliminates Credit Score Requirements for Home Refinances

Freddie Mac decided recently to remove some of the requirements for its servicers in allowing homeowners with lower credit scores to refinance.  This is a limited pool, but it’s a step in the right direction as the mortgage giant begins to ease the burden on some of its borrowers.

The current category in question is only borrowers who currently have 20% equity in their homes.  While this certainly doesn’t apply to many homeowners, it’s not a dead-end change.  This is more likely the start of easing requirements in general.  It’s also not a start to carefree lending–it does not apply to purchases of homes.  From Housing Wire:

“Freddie Mac eliminated the minimum credit score requirement for borrowers seeking a mortgage refinance from their existing servicer, as long as they have at least 20% equity in their home, according to guidance released Thursday.
The change goes into effect for any refinances with a settlement date on or after Jan. 5. Previously, Freddie required at least a 620 credit score before allowing such a high-equity refinance to take place.
In October, the Federal Housing Finance Agency instructed Fannie Mae and Freddie to remove barriers to allow more borrowers to take advantage of historically low interest rates through the Home Affordable Refinance Program.
Rates on most mortgage products began 2012 still below 4%. The government-sponsored enterprises removed upfront fees, limits on loan-to-value ratios and certain representation and warranty risk on the old loan file.”

“Freddie Mac eliminated the minimum credit score requirement for borrowers seeking a mortgage refinance from their existing servicer, as long as they have at least 20% equity in their home, according to guidance released Thursday.
The change goes into effect for any refinances with a settlement date on or after Jan. 5. Previously, Freddie required at least a 620 credit score before allowing such a high-equity refinance to take place.
In October, the Federal Housing Finance Agency instructed Fannie Mae and Freddie to remove barriers to allow more borrowers to take advantage of historically low interest rates through the Home Affordable Refinance Program.
Rates on most mortgage products began 2012 still below 4%. The government-sponsored enterprises removed upfront fees, limits on loan-to-value ratios and certain representation and warranty risk on the old loan file.”
Source: “Freddie Cuts Some Refi Credit Score Requirements,” HousingWire (Jan. 5, 2012)