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The Changing Mortgage World

The ever-changing mortgage world is adapting to the new reality of finding ways for certain borrowers to use non-traditional credit to create or boost credit scores. Freddie Mac began on July 10, 2022, to count rent payment history in their automated underwriting system. Giving weight to on time rent payments is new. It’s a big deal because rent payments aren’t credited by the credit agencies or on time payments are not included in a credit score. So here is how it works:

Applicants must be first time buyers with a 12 consecutive month rent history. With the borrower’s permission the lender submits the borrower’s bank account data to Freddie Mac’s Loan Prospect Advisor automated underwriter to pick up the rent history. The bank data is obtained from designated third-party service providers using the same automated process used to verify assets, income, and employment. Eligible rent payment data include checks, electronic transactions or digital payments made through Zelle, Venmo or PayPal.

Using a third-party vendor to pull account statements directly from banks helps lenders avoid the risk of getting doctored documents.

Another big change is Fannie Mae’s early Desk Top Underwriter Early Assessment tool. Our company Paramount Residential Mortgage Group is test piloting a program which allows the use of a tri-merged soft credit pull. The advantage of a soft credit pull is it contains all the same information as a hard pull, does not impact the credit score and most importantly does not result in unwanted credit solicitations sales calls, texts, email, and USPS mail.

 

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