Fannie Mae to Introduce Equifax Trended Credit Data and Verification Services Into Underwriting Platform

OREANDA-NEWS. During MBA’s Annual Convention & Expo in San Diego last month, Fannie Mae announced that in mid-2016 it will begin incorporating Equifax trended credit data, as well as the company’s verified employment and income data, into its automated underwriting platform — introducing important changes to help strengthen the home mortgage market for both consumers and lenders.

Fannie Mae plans to require lenders to use trended credit data from Equifax that will enhance the static snapshot of a consumer’s credit balances with 24 months of historical data, such as payment and balance.  Using trended credit data will help lenders examine and consider how consumers are managing their credit accounts over time.  Today, lenders can see consumers’ existing balances on accounts and whether they have paid their bills on time; however, they cannot tell if consumers are consistently carrying debt loads on revolving accounts such as credit cards, or whether they pay their balances in full every month. For example, a consumer with a large credit card balance who pays it off in full every month could be a better credit risk than a consumer with a large credit card balance who makes only the minimum payment each month.  And for consumers who don’t have a large amount of available credit, but pay their balances every month, trended credit data may help originators determine if they are a good credit risk and better their ability to obtain a mortgage loan.

Additionally, Fannie Mae will integrate verified consumer income from The Work Number® into its automated underwriting system.  Today, many lenders verify an applicant’s employment and income themselves.  One way this can be done is by having consumers provide W-2s and pay stubs.  Fannie Mae’s new program will move income and employment validation to Equifax, an independent third party, helping to reduce potential fraud.  This integration may also help simplify the process for consumers, as Equifax will independently verify employment and income without the applicant needing to provide additional paperwork in some instances.