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Fannie’s New Rental History Credit Boost Not as Simple as it Sounds

It seemed like a simple solution for expanding the credit profile of many first-time homebuyers, but Fannie Mae’s new plan to utilize rent payment history to that end will not immediately remedy the situation. Linda Goodman and Jun Zhu, in a new post on the Urban Institute’s (UI’s) Urban Wire blog, say it will eventually prove beneficial to many borrowers.

The two write that rental payment history is a strong predictor of borrower performance on a mortgage and Fannie Mae estimates its new process will allow about 17 percent of first-time borrowers, who are initially turned down for a loan, could be approved if they have a clean 12-month rental payment history. However, they say not all originators will be prepared to offer borrowers this option on its September 18 launch date.

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