For years, buyers have had to provide paper pay-stubs to qualify for their loan. My husband and I get everything electronically so doing a refi recently caused an extra step for our lender. Pain in the tush, but you do whatever your lender tells you to do to get it done, right?!?!
Apparently a large majority of employees are also receiving their income via direct deposit. I.E., no paper pay stub to speak of.
So, lookie here, Freddie Mac is going to roll out direct deposit income verification!
“Our direct deposit solution is an innovative, data-driven approach that takes minutes, not days to assess income so our clients can serve more borrowers more efficiently,” said Matt Vincent, Freddie Mac Single-Family vice president of credit and capacity. “Sourcing data directly from the mortgage applicant’s bank account increases accuracy, removes subjectivity, reduces manual underwriting errors and delivers a better experience for borrowers and lenders.”
Freddie Mac has said that additional requirements and, of course, specifics — including the effective date for the new policy — will be in its March bulletin. Not sure how soon this new thing will roll out, but it's definitely a great way to speed up the loan process.
Requiring paper pay stubs is still often the go-to method for mortgage underwriters, & a Freddie Mac spokesperson said the majority of the mortgage market still relies on paper stubs for income verification. Hopefully this will help end some of the 'paper' requirements for a home loan!
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