Fannie Mae’s latest version of Desktop Underwriter, released in September, utilizes an enhanced method of evaluating consumer credit behavior: trended credit data from Equifax. Trended credit data provides a fuller picture of a consumer’s credit behavior, replacing the traditional moment-in-time credit snapshot with a more dynamic two-year picture of a consumer’s history of managing revolving accounts.
Equifax has offered trended credit data to customers across a range of industries for years, and is excited that lenders submitting loans to Fannie Mae can now use its trended data as part of the underwriting process.
“By incorporating trended credit data into its automated underwriting system, Fannie Mae is helping lenders more accurately assess risk. That will reward the responsible use of credit, making it possible for consumers who regularly pay off their credit balances to potentially improve their chance of loan approval and access to homeownership,” said Craig Crabtree, senior vice president and general manager at Equifax.
With up to 24 months of historical payment data, lenders can see how consumers have managed their credit accounts over time, allowing them to better predict future behavior and more accurately assess risk through advanced analytics.
For example, a consumer with a large credit card balance who pays in full every month (a “transactor”) likely has a higher level of creditworthiness than a consumer with a large credit card balance who only makes the minimum required payment (a “revolver”).
Without trended credit data, tri-merge credit reports can’t always differentiate between those two types of consumers and this differentiation could open up opportunities for more borrowers.
The use of trended credit data may help people with lower incomes who regularly pay their full balances demonstrate that they are responsible borrowers deserving of credit.
“The best indicator of future credit behavior has always been – and continues to be – past behavior,” Crabtree said. “Giving weight to how borrowers pay off credit debt puts more power in their hands to control their credit evaluation. Borrowers can potentially improve their evaluation by paying off credit card bills in full each month.”
For Equifax, assessing credit worthiness is just one piece of the puzzle they solve for lenders. The company also facilitates more efficient risk assessment through its proprietary database, The Work Number, which delivers employment and payroll income in seconds on behalf of thousands of employers nationwide.
Instead of burdening the applicant with having to provide pay-related documentation, or having processors own the task of calling employers to verify an applicant’s information, The Work Number delivers those verifications instantly in most cases.
Lenders then have the capability to verify current employment and income in real time, and evaluate other factors involved in properly gauging borrower risk, such as length of job tenure.
“If the applicant’s information is not available in the database, we have a team of trained agents that deploy consistent business rules to reach out to the applicant’s employer to fulfill the verification on a lender’s behalf,” Crabtree said.
“Additionally, lenders can get a deeper insight into a borrower’s other sources of income through our 4506-T tax transcript service, which enables lenders to retrieve all tax transcript forms via streamlined fulfillment through our direct connection with the Internal Revenue Service.”
Equifax’s ability to provide accurate, fast data to lenders can help reduce fraud and streamline the mortgage process, which translates to an even bigger benefit — expanded opportunities for homeownership.
Craig Crabtree, SVP and General Manager
Crabtree has more than 20 years of industry experience, including origination, servicing, loss mitigation and capital markets expertise. Prior to joining Equifax, Crabtree spent nearly 18 years in senior leadership roles with SunTrust Mortgage, Crestar Mortgage and Strategic Insight Corporations.
Most recently at SunTrust, he served as the senior vice president, line of business manager for National Telephone & Internet Origination Platform. Under his leadership, the business unit grew from $60 million to more than $1.3 billion in annual production, increasing annual net profits from $254K to over $23 million.
Crabtree’s success garnered him and his SunTrust team recognition on a number of fronts. Over the course of several years, his business unit was honored in leading mortgage banking and financial surveys for profitability and overall execution. And for seven consecutive years, Crabtree was the recipient of SunTrust’s President’s Club award for production management.