will launch a new feature in its automated underwriting system to incorporate consumers’ rent payments in the mortgage credit evaluation process. Beginning September 18, 2021, Fannie Mae’s Desktop Underwriter® (DU®) will enable single-family lenders – with permission from mortgage applicants – to automatically identify recurring rent payments in the applicant’s bank statement data to deliver a more inclusive credit assessment. For qualified renters who may have limited credit history but a strong rent payment history, Fannie Mae’s DU enhancement creates new opportunities for homeownership while promoting safe and sound lending.
The new update to DU is a positive change for eligibility – only consistent rent payments will be considered to improve eligibility. Any records of missed or inconsistent rent payments identified in the bank statement data will not negatively affect the applicant’s ability to qualify for a loan sold to Fannie Mae. Rent payments that appear in the payment history of the borrower’s bank account data can be identified, whether made via check or electronically, such as via a company’s payment portal or other digital payment solution.
This is great news for consumers, especially the un- and under-banked. Consumers should get the credit that they deserve for making timely rental payments. And, data shows that timely rental payments lift up consumers. In his blog, Frater wrote that “In a recent sample of applicants who had not owned a home in the past three years and did not receive a favorable recommendation through Desktop Underwriter, 17% could have received an Approve/Eligible recommendation if their rental payment history had been considered. We will do all we can to help lenders and consumers take advantage of this positive change to DU.”
Eric J. Ellman is Senior Vice President for Public Policy and Legal Affairs at the Consumer Data Industry Association (CDIA) in Washington, DC. He also served for eight months as Interim President and CEO of the Association. More