Fannie Mae is deploying a program to encourage multifamily owners to share renters' on-time payment data, in a bid to build credit among prospective homebuyers.
The government-sponsored enterprise's Multifamily Positive Rent Payment Reporting pilot will reimburse multifamily owners' cost of collecting renters' payment data for a 12-month period through any of three approved vendors, it said Tuesday. The initiative follows the GSEs' earlier efforts to incorporate positive rent data into their underwriting, and a similar program rolled out last November by Freddie Mac.
Fannie Mae's latest pilot is an effort to create more homeownership opportunities for historically underserved groups, including the around 20% of the nation's population with little to no credit history, said Michele Evans, executive vice president and head of multifamily at Fannie Mae.
"By enabling easier and more expansive adoption of positive rent payment reporting, we can knock down this longstanding barrier to building credit and help more consumers begin to establish a strong financial and credit foundation," she said in a press release.
The initiative includes three approved vendors to gather information for the credit bureaus: Jetty's Credit program, Rent Dynamics and Esusu Financial, the fintech that partnered with Freddie Mac's effort last year. Each vendor also provides additional, unique services for renters and owners that won't be covered by the pilot, such as flexible rent payment loan products.
Each vendor will determine eligible multifamily properties, which are active loans with five or more years to reach maturity, according to a Fannie Mae general guidance. The pilot will only record positive rent payment information, automatically un-enrolling renters who miss a payment. Renters can also choose to opt out of the program altogether, the GSE said.
Fannie Mae last September began factoring rent payment history into its Desktop Underwriter, while Freddie Mac in July began accepting 12 months of on-time rental payments for its Loan Product Advisor technology.
Initiatives to incorporate prospective borrowers' rent payment data into their credit scores have gained steam in the past year, including efforts by entities outside of the GSEs. Experian recently began to test a feed of rent data into FICO Score 8, while multifamily lender Berkadia also announced a partnership with Esusu. Nuveen Real Estate last week also partnered with Esusu to provide the rent payment reporting at no cost to residents in the firm's affordable housing portfolio.
