Fannie Mae and Freddie Mac are trying to make mortgages accessible for people working in the gig economy, according to this article in the Washington Post.
When you think gig economy worker, think your Uber or Lyft driver, a person doing odd jobs through Task Rabbit or the person you task with bringing you food late at night through your Favor app.
Up to 30% of the U.S. workforce may work in the gig economy in some form or fashion and that number will most likely climb to 43% by 2020 according to data from Intuit, owner of TurboTax.
This kind of here-and-there work is currently not a plus on a mortgage application — where applicants are typically expected to have two years of documented income and reasonable assurance that the income stream will continue uninterrupted.
According to the Washington Post article, a recent survey of 3,000 lending executives by Fannie showed that 95% of those execs say it is difficult under current lending guidelines to approve gig workers for home loans.
Though no ironclad solution is out as of yet, Fannie and Freddie are inching toward one, the WaPo reports. Right now it looks like the answer is minimizing the role of the employer and playing up the applicant’s ability to earn consistent income.
“If someone is pulling income from Uber for only six months…they may have been doing similar things for years beforehand [for a different company]…That should be [the] primary focus rather than the exact employer and position that generated the income,” Mason-McDuffie Mortage Executive Loan Officer John Meussner told the Washington Post.
“If someone can make similar income over the course of years doing various things in various places [in the gig economy], it could be argued they’re more dependable than someone with a long history with a salaried position in a field that is being disrupted by tech, in which case the loss of a job would be devastating financially,” Meussner added.