MReport July 2022

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M R EP O RT | 31 QUICK TAKE Fannie Mae Op-Ed: Making Rent Count Rent payment history is helping more people get a mortgage, including people of color. By Cyndi Danko L ess than a year after Fannie Mae launched a groundbreak- ing innovation to help more renters responsibly qualify for a mortgage, the early results are clear: including consecutive rent payments in home loan under- writing works. Since we automated the inclu- sion of positive rent payment data into our Desktop Underwriter® (DU®) last September, more than 2,000 loan applications have become eligible for purchase by Fannie Mae that otherwise would not have been. Of these, approximately 41% of the borrowers identified them- selves as Black or Latino/Hispanic. We believe this change, and other innovations that create a more inclusive mortgage eligibility assessment, will help to address the historically inequitable credit opportunities that have edged underserved populations out of homeownership and its genera- tional wealth-building benefits. The early adoption and success of DU's positive rent data en- hancement lies with the industry stakeholders who are coming together to make it available to consumers—from the technology service providers and asset report vendors who built the capabilities for the secure exchange of the data, to the lenders who develop customer relationships that help people become homeowners. We view this innovation not only as a way to help enable more equi- table access to mortgage financing, but also as a powerful tool to help our lender partners attract new customers. "We recognize positive rental payment history in DU as an immediate and practical benefit that allows us to focus on and bring attention to the first-time homebuyer market, particularly borrowers with limited credit his- tories," said Steve Majerus, Chief Executive Officer of Synergy One Lending in San Diego. "By incorporating a vital component of their lives, such as rental pay- ments, into the credit evaluation process, we can now provide a path to homeownership to these borrowers." Today, approximately 20% of the U.S adult population has little credit history—a group in which Black and Latino/Hispanic people are disproportionately represented. Using positive rent payment data in mortgage underwriting, we be- lieve, could help a portion of these consumers become homeowners, because a demonstrated history of making timely rent payments is an indicator of creditworthiness. This is just one way Fannie Mae, its lenders, and other industry stakeholders can work together to remove barriers people face when they want to buy their own home, particularly their first home. We look forward to the day when rent payment history is not only commonly accepted in mortgage evaluations, but when it is adopted even more broadly into the consumer credit reporting ecosystem, enabling consumers with limited or no credit history to build their financial profile safely and effectively. CYNDI DANKO is the SVP, Chief Credit Officer Single-Family at Fannie Mae. She is a versatile and energetic leader with more than 25 years of progressive experience in risk management and software product management, including leading Fannie Mae's premier credit risk management software applications Desktop Underwriter and Collateral Underwriter.

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