Fannie Mae Will Consider Rental Payment History for Mortgage Applications

Starting Saturday (Sept. 18), mortgage financing giant Fannie Mae will consider rent payment histories when determining the creditworthiness of people looking to finance homes.

The 12 most recent rental payments will be examined when lenders use automated creditworthiness check systems. Permission to look at records — bank statements or third-party online payments — must be given to Fannie Mae by the applicants.

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“For many households, rent is the single largest monthly expense. There is absolutely no reason timely payment of monthly housing expenses shouldn’t be included in underwriting calculations,” Sandra L. Thompson, acting director of the Federal Housing Finance Agency, which regulates Fannie Mae, said in a statement.

Landlords currently don’t report rent payments to credit reporting bureaus, which can sometimes close people out from the homeownership market. Housing advocates have been fighting to change this so that people who have been paying their rent on time can have that aspect counted in their favor when it comes to qualifying for a mortgage.

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According to Fannie Mae, an estimated 17% of mortgage applicants since 2018 would have gotten mortgages if their rental histories were included as part of their creditworthiness. Many are part of a group of people in the U.S. that are often subjected to long-ranging discriminatory housing practices.

“While credit history is a key element in evaluating a borrower’s ability to make a mortgage payment, building credit in the United States is not an equitable endeavor,” said Hugh Frater, Fannie Mae’s chief executive, in a blog post.

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Roughly 45 million people in the U.S. have little or limited credit history, which makes it hard to get a mortgage despite other factors, according to a report from the Consumer Federal Protection Bureau. In particular, Black and Hispanic mortgage applicants fall into this bracket at a higher percentage, which adds to the country’s widening wealth gap.