MReport November 2022

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34 | M R EP O RT FEATURE F annie Mae recently launched the Multifamily Positive Rent Payment Reporting program—a pilot program aimed at helping renters build their credit history and improve their credit score. Through the program, eligible multifamily property owners will have the opportunity to share timely rent payment data through a vendor network to the three major credit bureaus for incorpo- ration in the renter's credit profile. The Positive Rent Payment Reporting program aims to ac- celerate the adoption of rent pay- ment reporting by the multifamily industry, complimenting Fannie Mae's existing practice of helping lenders incorporate positive rent payments in the single-family mortgage credit evaluation process via Desktop Underwriter (DU). Michele M. Evans is Fannie Mae's EVP and Head of the Multifamily Division, responsible for the compa- ny's multifamily business functions. Fannie Mae's Multifamily Division is a source of financing and securi- tization for quality rental housing in the United States. The Multifamily Division serves a wide spectrum of the market, including conventional, rent-restricted, cooperatives, seniors, student housing, and manufactured housing communities, and finances all loan sizes—from a $1 million single-asset loan to a $1 billion struc- tured transaction facility. Esusu Financial Inc., Jetty Credit, and Rent Dynamics have been tapped as approved vendors for the program, as the three will collect rent payment data from multifamily property owners and format it for dissemination to the credit bureaus. The program is a positive-only initiative, as renters who miss a payment will be au- tomatically unenrolled to preserve their credit standing, and renters may opt out of the program if they prefer. As head of the division administering the Positive Rent Payment Reporting pilot, Evans recently shared with MReport details of the program, and how the GSE continues to help renters and homeowners overcome the barriers faced on their housing journey. Please explain a brief history of the program and what it offers. T he Multifamily Positive Rent Payment Reporting Pilot program rolled out September 27 and will run for 12 months through September 30, 2023. At the core of the program, Fannie Mae will be able to share positive rent payments to the three major credit bureaus for inclusion in the calculation of a consumer's credit report to help support, grow, and increase people's credit scores. What they are reporting is on-time monthly payments to the credit bureaus … so it is a positive, not a negative. We are driving towards bolster- ing equitable access to credit and removing unnecessary obstacles in a consumer's housing journey, whether they want to rent, or aspire to one day own a home of their own. Given that rental pay- ments are rarely included in credit histories, we think that that puts many renters at a disadvantage. As a company, Fannie Mae is extremely focused on Environmental, Social, and Governance (ESG) efforts, and this program fits very nicely into the housing stability and racial equity programs that we have. The Multifamily Positive Rent Payment Reporting program is part of Fannie Mae's Equitable Housing Plan and our Duty to Serve Plan for 2022. What spurred Fannie Mae to launch the Positive Rent Payment Reporting pilot program? W hen we investigated some of the data regarding the percentage of the population that has no established credit history, based on some work that was done by TransUnion, 15% of the population nationwide has a very thin or no credit profile. We dug a little deeper and asked, "How does that impact Black and Latino consumers?" When we looked specifically at those two groups, we examined their credit scores, and when you look at Black consumers, 41% had subprime credit scores, while Latinos had 29% subprime scores, versus white consumers at 16%. As you can imagine, these imbalances reinforce racial disparities, their access to credit, and the ability for renters to access quality, affordable housing. The goal for many renters, in many instances, particularly given what homeownership does in terms of building wealth, is to ultimately become a homeowner. This is truly an opportunity to really help renters. When you think about the inflationary pres- sures that people are seeing today, anything that can lower costs would be a positive. We talked a little bit about access to homeownership. It is something that we do that is part of what Fannie Mae does. We would love to see a continuation of that housing journey from renter to homeowner one day, and if we could be a catalyst to support that, that would be great. We also think there are a large number of credit-invisible consumers, and we think that this really kind of chips away at that number. And again, as people are growing their credit scores, it gives them opportunities. Bringing Credit Invisibles Into the Light Michele M. Evans of Fannie Mae discusses the GSE's new Positive Rent Payment Reporting pilot program and how renters on the path to homeownership can build their credit history and improve their credit score. By Eric C. Peck

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