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Fannie Mae unexpectedly, indefinitely delays use of trended credit data

Latest Desktop Underwriter update will have to wait

With just a handful of days left until Fannie Mae was set to release a heralded update to its Desktop Underwriter program that could have opened up the credit box to potential borrowers previously deemed unworthy, the government-sponsored enterprise is unexpectedly and indefinitely delaying the implementation of Desktop Underwriter Version 10.0.

Earlier this year, Fannie Mae announced that it planned to release the latest update to Desktop Underwriter on the weekend of June 25.

The update is notable and significant because it includes the requirement that lenders begin using trended credit data when underwriting single-family borrowers. Fannie Mae is working with Equifax and TransUnion to provide the data.

As it stands currently, credit reports used in mortgage lending only indicate the outstanding balance and if a borrower pays on time or is delinquent on existing credit accounts such as credit cards, mortgages or student loans. 

Through trended credit data, lenders can access the monthly payment amounts that a consumer made on these accounts over time.

Fannie Mae’s announcement of the use of trended data made a splash last year due to the potential to make credit available to borrowers with nonstandard credit histories.

“With these two dramatic steps, Fannie Mae is helping to make the home mortgage market smarter, safer, and open to more consumers,” said Craig Crabtree, general manager of Equifax Mortgage Services in October 2015. “Increasing the use of trended data will help improve the evaluation of risk and reward the responsible use of credit, while incorporating Equifax verification services will help streamline the underwriting process.”

Equifax added that trended data expands the credit information used for evaluating a home loan applicant, adding a more dynamic two-year picture of the applicant’s history managing revolving accounts.

“For some consumers who don’t have a large amount of available credit, but pay their balances every month, trended data may potentially improve their ability to obtain a mortgage by providing lenders with a more complete picture of their credit behavior over time,” Crabtree said.

But none of that is happening, at least not yet.

According to Fannie Mae, as it prepared for the release of Desktop Underwriter Version 10.0 later this month, it found some “issues” with the program and needs to remedy those issues before it can fully implement the update.

“As we prepared for the release, we experienced issues with the testing environment and decided it would be prudent to delay the release,” Fannie Mae said in an announcement sent to lenders and posted on its website.

“We are rapidly addressing this issue in order to deliver these new enhancements to our customers to help provide even more certainty and simplicity while expanding access to credit and sustainable homeownership for creditworthy borrowers,” Fannie Mae continued.

“Please accept our apology for any inconvenience caused by the postponed implementation of DU Version 10.0 or any disruption to your use of our technology,” Fannie Mae said.

Fannie Mae adds that it will let lenders know “as soon as possible and give you ample time to get ready” for the actual implementation of Desktop Underwriter Version 10.0.

[Correction: The headline of this article is now updated to accurately reflect what data is being used and its effect. The trended credit data does not affect a person's credit score.]

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