Mortgage

Fannie Mae sets new date for use of trended credit data

After unexpected delay, latest Desktop Underwriter update coming soon

Last week, Fannie Mae unexpectedly announced a delay to the latest update to its Desktop Underwriter program.

The delay was noteworthy because it pushed back the implementation of the use of trended credit data when underwriting single-family borrowers, a change that could open up the credit box to potential borrowers previously left behind due to their credit history, or lack thereof.

The delay was also noteworthy because at the time, Fannie Mae didn’t provide a date for when the use of trended credit data was going to begin, telling lenders that it planned to let them know of the updated date “as soon as possible and give you ample time to get ready” for the actual implementation of Desktop Underwriter Version 10.0.

As soon as possible turned out to be Tuesday, as Fannie Mae announced the implementation of Desktop Underwriter Version 10.0 is now scheduled for the week of Sept. 24, 2016.

“We are focused on delivering the best technology solutions that provide certainty and stability for our customers,” Fannie Mae said in a statement provided to HousingWire.

“Our release date ensures that all of our customers have the time they need to fully test and transition to the new DU version 10.0,” Fannie Mae continued. “We remain unwavering in our commitment to earn our customers’ business every day and look forward to bringing them the industry leading capabilities of the enhanced DU, such as use of trended data in credit risk assessment and automated underwriting for borrowers with no traditional credit to expand access to mortgage financing.”

Fannie Mae originally delayed the implementation of Desktop Underwriter Version 10.0 due to some “issues” it found when testing 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 last week in an announcement sent to lenders and posted on its website.

But now, those issues appear to be on the way to being remedied, bringing the implementation of the use of trended credit data closer to fruition.

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.”

TransUnion added that after a recent analysis, it found that the use of trended data could potentially impact vast numbers of consumers in the housing market through better pricing and access to mortgage loans. 

“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 added.

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