An effort under way at housing-finance giant Freddie Mac could increase mortgage approvals for borrowers who might otherwise be shut out of home buying, the Wall Street Journal reported. Freddie has been testing underwriting software from a financial-technology firm, ZestFinance, that could make mortgages more available for certain applicants, including first-time home buyers and minorities. The software evaluates consumers’ borrowing and income histories in new ways. Freddie has been testing the software for at least several months as the mortgage giant is assessing whether the software can improve the accuracy of its own models’ risk predictions. Freddie and ZestFinance met with Freddie’s overseer, the Federal Housing Finance Agency, a few months ago to discuss the matter.
