Fannie Mae is launching a new feature in its automated underwriting system to incorporate consumers’ rent payments in the mortgage credit evaluation process.
Beginning Sept. 18, 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.
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.
“Many renters believe they will never be able to buy their own home because of insufficient credit. We can responsibly expand mortgage eligibility by including positive rent payment history in underwriting risk assessments,” says Hugh R. Frater, CEO of Fannie Mae. “We believe this will be the first time any large-scale automated mortgage underwriting system will leverage electronic bank statement data to consider positive rent payment history.”