Fannie Mae aims to make loans more accessible to homebuyers by including rent payments as part of the mortgage approval process. This action is intended to help borrowers with limited credit histories have better accessibility to home loans.
According to an article by Realtor.com and The Wallstreet Journal, Fannie Mae will start helping lenders factor in borrowers’ history of rent payments with mortgage applications beginning in September. While including rent history will be an option, Fannie Mae does not require lenders to consider rent history if a borrower has a credit score that meets the criteria. Typically, credit reports do not include rent payments as most landlords do not report data to credit-reporting firms.
Speaking about this shift, Hugh Frater, Fannie Mae’s chief executive, said: “In some markets, it’s just as expensive to rent as it is to own. Many renters have the history of making payments, which in my opinion should be equally and fairly considered in their ability to pay a mortgage.”
Changes to Fannie Mae’s underwriting system will allow them to automatically identify rent payments from an applicant’s bank account information.
To learn more about this change, click here.
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