Freddie Mac Cuts Refi Credit Score Requirements for Some

In an effort to make refinancing available to more homeowners Freddie Mac announced that it would no longer require homeowners to have credit scores of 620 or higher as long as the loan is current, the LTV at 80% or higher, and the refinance is being completed with their existing lender.

The new rule became effective for loans settled as of January 5, 2012.

In December Fannie Mae eliminated the need for servicers to determine the borrower’s ability to repay a refinance.  Both servicers have eliminated up front refinancing fees, lifted the limits to refinancing underwater loans, and taken steps to mitigate the representation and warranty risks incurred by the lender on the old loan in an effort to make low interest refinancing accessible to more homeowners.