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Freddie Mac, a US government agency that funds mortgages for lenders, has partnered EarnUp, a fintech that helps borrowers repay their loans on time.
Under the partnership, Freddie Mac will distribute EarnUp’s services to low-income consumers through three of its financial counseling partners, nonprofit organizations set up during the 2008 crash to help struggling borrowers avoid foreclosure. In the pilot, a select pool of consumers will be given free access to EarnUp for a year.
EarnUp allows consumers to manage all of their loans via a single dashboard. Its technology automatically deducts small amounts from users’ paychecks that go toward repaying their loans to make sure they stay on top of their debts. EarnUp also generates personalized financial advice to help users better manage their loan repayments. Freddie Mac says that by first rolling out the service with a select group of consumers, the agency will be able to gain deeper insight into the needs of low-income borrowers, enabling it to later introduce more services for this group. This suggests the startup may share its data with the agency.
Working with nonprofit organizations seems like a good way for financial health fintechs to gain traction. Household debt in the US is continuing to rise, making it likely that delinquencies on all types of loans will start to increase in the near future. If this happens, a greater number of less-affluent borrowers would probably turn to financial counseling organizations for help. In turn, this would present a valuable opportunity for companies like EarnUp to boost awareness and distribution. As such, we may see other …read more
Source:: Businessinsider – Finance