Fannie Mae to Include Rent Payments in Mortgage Approval Process

Fannie Mae to Include Rent Payments in Mortgage Approval Process

Datalinx clients have always known that reporting consistently on-time rent payments to the credit bureaus can have an incredibly positive impact on a consumer’s borrowing power. Now it seems that Fannie Mae — the nation’s leading source of mortgage financing — has also realized the power of rent payment reporting, and it could be a game-changer for first-time homebuyers.

Introducing “positive rent payment history”

In September 2021, Fannie Mae announced that it would be adding a new “positive rent payment history” feature to its Desktop Underwriter® (DU®) software. The feature allows the program to use verification of asset (VOA) reports to identify and factor in recurring rent payments when assessing a borrower’s credit.

Rent payments traditionally will not appear on consumer credit reports without a third-party reporting service like Datalinx — and Fannie Mae’s new feature won’t change that. However, through VOA reports (like bank statements), potential borrowers can prove to a mortgage lender that they have made their recurring rent payments on time and consistently. Fannie Mae’s DU software will also automatically identify rent payments in an applicant’s bank statement data, but only with the applicant’s permission.

Like the major credit bureaus’ recent addition of buy now, pay later (BNPL) loans to their credit reporting data, Fannie Mae’s new program was created to promote a more inclusive credit evaluation.

“This is one step in a series of efforts Fannie Mae is exploring to help expand sustainable homeownership opportunities for underserved populations and support a more equitable housing finance system,” the Fannie Mae website reads.

Your renters could already be benefiting from their positive rent payment histories with your firm if you were a Datalinx data furnisher! Reach out to us today to get started.