Calendar with bill due dates circled, including on that says pay rent

OCTOBER 6, 2022

Fannie Mae Joins Freddie, FHA to Use Rent Payments

By Talis Shelbourne

A majority of mortgage providers will now allow renters with thin credit scores to include on-time rent payments in the data a lender uses when considering approvals.

WASHINGTON – Fannie Mae launched its Multifamily Positive Rent Payment Reporting pilot program last week, offering a national lifeline to aspiring homeowners with no established credit history.

The program is expected to have a significant impact on cities with high renter populations and on groups that often have difficulty establishing credit.

Fannie Mae, officially the Federal National Mortgage Association, was created by Congress during the Great Depression. The public-private “government-supported enterprise” purchases mortgages from financial institutions.

Fannie Mae had already updated its computer-automated system last year to include bank records showing consistent rent payments by individuals. The system, called the Desktop Underwriter, is used by lenders to evaluate the creditworthiness of mortgage applicants.

The change meant individuals could collect documentation of their rent payments made via check, electronically through a rental management’s payment portal and through other electronic methods connected to a bank and provide those to a mortgage lender as evidence of a good rental history. Freddie Mac and FHA loans previously announced rent-payment considerations.

This latest rent reporting program allows the renters of multifamily properties to report their rent payment history. As an incentive, Fannie Mae will cover the first year of costs associated with reporting that data.

According to Fannie Mae, if a renter misses a payment, they are automatically unenrolled so it does not damage their credit score; landlords, however, are allowed to report missed rent payments to credit agencies on their own, which would negatively impact credit history.

Credit is an essential part of the home buying process, and experts advise prospective homeowners achieve a credit score of at least 620 to get the best rates for a mortgage.

The lender ultimately decides to approve the loan. In some cases, Fannie Mae will purchase a loan to “guarantee” it, which means it is responsible for the debt if the borrower defaults.

© 2022 Journal Media Group.


Americans Choose Real Estate as the Best Investment

  • According to a Gallup poll, real estate has been rated the best long-term investment for eight years in a row.
  • Real estate tops the list because you’re not just buying a place to call home – you’re investing in your future. Real estate is typically considered a stable and secure asset that can grow in value over time.
  • Let’s connect today if you’re ready to make real estate your best investment this year.
Americans Choose Real Estate as the Best Investment [INFOGRAPHIC] | MyKCM

Is the Number of Homes for Sale Finally Growing?

Is the Number of Homes for Sale Finally Growing? | MyKCM

An important metric in today’s residential real estate market is the number of homes available for sale. The shortage of available housing inventory is the major reason for the double-digit price appreciation we’ve seen in each of the last two years. It’s the reason many would-be purchasers are frustrated with the bidding wars over the homes that are available. However, signs of relief are finally appearing.

According to data from realtor.com, active listings have increased over the last four months. They define active listings as:

The active listing count tracks the number of for sale properties on the market, excluding pending listings where a pending status is available. This is a snapshot measure of how many active listings can be expected on any given day of the specified month.”

What normally happens throughout the year?

Is the Number of Homes for Sale Finally Growing? | MyKCM

Historically, housing inventory increases throughout the summer months, starts to tail off in the fall, and then drops significantly over the winter. The graph below shows this trend along with the month active listings peaked in 2017, 2018, and 2019.

What happened last year?

Is the Number of Homes for Sale Finally Growing? | MyKCM

Last year, the trend was different. Historical seasonality wasn’t repeated in 2020 since many homeowners held off on putting their houses up for sale because of the pandemic (see graph below). In 2020, active listings peaked in April, and then fell off dramatically for the remainder of the year.

What’s happening this year?

Is the Number of Homes for Sale Finally Growing? | MyKCM

Due to the decline of active listings in 2020, 2021 began with record-low housing inventory counts. However, we’ve been building inventory over the last several months as more listings come to the market (see graph below):There are three main reasons we may see listings continue to increase throughout this fall and into the winter.

  1. Pent-up selling demand – Homeowners may be more comfortable putting their homes on the market as more and more Americans get vaccinated.
  2. New construction is starting to take off – Though new construction is not included in the realtor.com numbers, as more new homes are built, there will be more options for current homeowners to consider when they sell. The lack of options has slowed many potential sellers in the past.
  3. The end of forbearance will create some new listings – Most experts believe the end of the forbearance program will not lead to a wave of foreclosures for several reasons. The main reason is the level of equity homeowners currently have in their homes. Many homeowners will be able to sell their homes instead of going to foreclosure, which will lead to some additional listings on the market.

Bottom Line

If you’re in the market to buy a home, stick with it. There are new listings becoming available every day. If you’re thinking of selling your house, you may want to list your home before this additional competition comes to market.