Freddie Mac announced it has eliminated its minimum credit score requirement for borrowers wanting to refinance, but they must have at least 20 percent equity in their home, HousingWire reports. Freddie Mac used to require a minimum credit score of 620.
In following instructions from the Federal Housing Finance Agency, government-sponsored enterprises Freddie and Fannie Mae are both looking at how they can ease requirements to spur more refinances so more borrowers can take advantage of record-low mortgage rates.
Fannie Mae has removed a refinancing requirement that lenders must determine the borrower’s ability to repay — aimed at increasing refis and helping more underwater borrowers stay current on their mortgages.
HousingWire reports that about 4 million loans serviced by Fannie Mae and Freddie Mac are underwater, in which the borrower owes more on their loan then their home is currently worth.
Source: “Freddie Cuts Some Refi Credit Score Requirements,” HousingWire (Jan. 5, 2012)