It’s official: Fannie Mae moves to open credit box with trended credit data

Desktop Underwriter 10.0 arrives

This weekend marked the official launch of Fannie Mae’s Desktop Underwriter Version 10.0, implementing the long-awaited use of trended credit, a change that could open up the credit box to potential borrowers previously unable to get a mortgage due to their credit history.

“Desktop Underwriter transformed the industry when it was introduced over twenty years ago,” said Marianne Sullivan, senior vice president of single-family business capabilities with Fannie Mae.

“Today’s DU 10.0 enhancements highlight the continued investments and improvements we’re making in our technology to be better partners for our customers, and to provide access to mortgage credit for creditworthy borrowers,” Sullivan continued.

The new program, while much anticipated, went through some difficulties to implement. Fannie Mae unexpectedly delayed the used of trended credit data in mid-June, only days before it was supposed to be released on the weekend of June 25.

But now, trended credit data is here, and it could be a game-changer.

So what’s with the big hype around trended credit data? Trended credit data, according to Fannie Mae, allows a smarter, more thorough analysis of the borrower’s credit history and helps creditworthy borrowers obtain access to mortgage credit and sustainable homeownership.

As it stands, credit reports used in mortgage lending only indicate the outstanding balance and if a borrower has been on time or 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 has made on these accounts over time.

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

Here are several key changes when it comes to the use of trended credit data. Check here for a more in-depth list and description.

Use of trended credit data in credit risk assessment

  • Considers the monthly payment amounts that a consumer has made on revolving accounts, such as credit cards, over the past two years
  • Offers lenders more insight into how a borrower tends to pay off their revolving credit lines each month, providing a more comprehensive risk assessment
  • Gives borrowers greater ability to control their credit evaluation, and benefits borrowers who regularly pay off, or pay more than the minimum required amount, of their revolving debt, increasing the likelihood that they will receive an “Approve” recommendation from DU

Sullivan added, “We continue to listen to our customers and make improvements to DU that take into account how our lenders tell us they want to work and to help them better serve today’s market.”

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