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Multifamily Wire

Single-Family to incorporate consumers’ rent payments in the mortgage credit evaluation process

August 11, 2021
Michele M. Evans - Executive Vice President and Head of Multifamily
Michele Evans

Head of Multifamily - Executive Vice President

The leap from renting to homeownership has long been one of the crucial steps on the wealth-building ladder. For many lower-income consumers and minorities, homeownership has been particularly difficult to achieve. As part of our mission to increase access to affordable housing and support racial equity in the housing system, Fannie Mae is committed to responsibly supporting an expansion of sustainable homeownership for these families. 

Recently, we announced that Single-Family is updating its automated underwriting system, Desktop Underwriter® (DU®), to consider rent payment history in the credit risk assessment for eligible borrowers. Fannie Mae expects that this enhancement will increase opportunities for thousands of qualified renters to become first-time homebuyers. This is an important step to help lower-income renters – especially Black families and other people of color – use their positive rent payment history to access mortgage credit.

Today, there are Multifamily borrowers who are already reporting renter payment history and we will engage and learn from them and other industry stakeholders as we build out our plan.

Expanded rental payment reporting to credit bureaus can help all renters build credit, not just renters seeking homeownership. We can have impact here:

  • Renters with little to no credit history can improve their ability to rent apartments with better terms, like lower security deposits and no co-signer.
  • Positive rent payment reporting can also help improve renters’ ability to qualify for lower-cost credit on college tuition, insurance, car loans, and other forms of credit-based programs and lending.
  • Renters who understand these benefits are more likely to pay their rent on time, which is a good outcome for our borrowers and DUS® lenders.

We plan to share more with you about this work in the coming months and look forward to partnering closely with our Multifamily lender partners on this to ensure that we are addressing borrower needs while helping to build a more creditworthy and stable renter population.