It seemed like a simple solution for
expanding the credit profile of many first-time homebuyers, but Fannie Mae’s
new plan to utilize rent payment history to that end will not immediately remedy
the situation. Linda Goodman and Jun Zhu, in a new post on the Urban Institute’s
(UI’s) Urban Wire blog, say it will eventually prove beneficial to many
borrowers.

The two write that rental payment
history is a strong predictor of borrower performance on a mortgage and Fannie
Mae estimates its new process will allow about 17 percent of first-time
borrower
s, who are initially turned down for a loan, could be approved if they
have a clean 12-month rental payment history. However, they say not all originators
will be prepared to offer borrowers this option on its September 18 launch
date.

…(read more)

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