In October, Fannie Mae announced that it would be incorporating Equifax trended credit data into its automated underwriting platform, introducing important changes to help strengthen the home mortgage market for both consumers and lenders.
“Using trended credit data will help lenders examine and consider how consumers are managing their credit accounts over time,” said Craig Crabtree, general manager of Equifax Mortgage Services.
Trended data will help lenders to differentiate between “transactors” and “revolvers,” Crabtree said. A home mortgage applicant with a large credit card balance who has a history of paying in full every month — a transactor — is typically considered to be a better credit risk than an applicant with a large credit card balance who only makes the minimum required monthlypayment — a revolver.
“Existing credit reports can’t always differentiate between those two consumers. And for consumers who don’t have a large amount of available credit, but pay their balances every month, trended credit data may help lenders determine if they are a good credit risk and better the consumer’s ability to obtain a mortgage loan,” Crabtree said.
Fannie Mae is also integrating verified consumer income from Equifax’s The Work Number database into its automated underwriting system. Today, many lenders verify an applicant’s employment and income themselves, often by having consumers provide W-2s and pay stubs.
This is not only a time-intensive process that relies on consumers, but it also increases the risk to lenders due to a potential for fraud because the employer is removed from the process.
“Fannie Mae’s new program will move income and employment validation to us since we’re an independent third party, helping to reduce potential fraud,” Crabtree said.
“This integration may also help simplify the process for consumers, as we will independently verify employment and income without the applicant needing to provide additional paperwork in some instances.”
The Work Number, a consumer-reporting database operated by Equifax’s Workforce Solutions business unit, contains information from more than 5,000 employers nationwide and provides up-to-date information directly from employers. Information in The Work Number includes hire dates, termination dates, salary information that is refreshed each pay period, and more.
Equifax also has a direct connection to the IRS for 4506-T tax transcript requests.
Equifax has invested in analytical capabilities that enable data sources to be integrated, distributed, produced and accessed in more effective ways to drive new product innovation and help customers see a more complete view of the consumer.
The company has also made the strategic acquisitions necessary to develop increased data and technology capabilities — placing it in a state of maturity and scale that allows these capabilities to truly be harnessed.
“We have been entrusted as stewards of data from a number of sources, and we take that responsibility very seriously,” Crabtree said.
The Fannie Mae integration, scheduled for mid-2016, is just one of Equifax’s many opportunities to serve the mortgage market in the next year.
“Customers increasingly look to us for unique and creative solutions that help their businesses operate more effectively and efficiently,” Crabtree said.
“Moving forward, we will continue to invest in improving the customer experience to help customers meet their goal of obtaining accurate consumer data while enabling consumer access to credit. We are pushing the boundaries of technology, while honoring our responsibility to advocate for consumers.”