Fannie Mae Uses Rent Payment Data From Blend As Part Of Expanding Access To Credit

The headquarters of Fannie Mae is seen in Washington, DC, the United States, on February 21, 2014. REUTERS / Kevin Lamarque

Jan. 11 (Reuters) – U.S. housing finance giant Fannie Mae has started integrating data from digital banking startup Blend Labs Inc. into its underwriting program to make it easier for lenders to assess payment history a borrower’s rent when approving a home loan.

Fannie’s efforts to include rental payment history in the loan approval process come as President Joe Biden’s administration strives to improve access to credit and address inequalities in the system housing.

Other sources of data, such as rent payments, can help lenders more accurately assess the creditworthiness of borrowers with limited credit histories, according to credit experts.

Fannie Mae, along with Freddie Mac, guarantees more than half of the nation’s mortgages and must approve the loans she insures, as well as the lenders that originate them.

“We believe this will allow more first-time buyers or aspiring first-time buyers to qualify responsibly, including those with more limited credit histories,” said Steve Holden, vice president data on individual Fannie families and analytics.

About 20% of the U.S. population has little credit history – a group in which black and Hispanic consumers are disproportionately represented, according to Fannie.

San Francisco-based Blend gathers third-party data that it shares with lenders to help them quickly verify requirements such as a borrower’s income source.

The company powers the mortgage application process of several major lenders, including Wells Fargo & Co, US Bancorp and Mr. Cooper Group Inc, processing on average about $ 5 billion in loans per day, the statement said.

Many lenders were eager to participate in the new program, but were reluctant to ask borrowers for bank statements showing they had made timely rent payments, and at the added burden of having to manually review those statements, said Nima Ghamsari, co-founder and co-founder of Blend. chief executive officer.

“There’s only a few times a year that the CEOs of some of these mortgage companies call me up and say, ‘Hey, how come you don’t have this thing yet? “”, did he declare. “It was one of those times that I got a lot of phone calls.”

After Fannie said in August that she would take rental payment history into account, Blend integrated bank rental payment transaction data into their platform and Fannie in turn integrated the new Blend functionality into its subscription system.

Lenders using Blend can ask fintech to send payment data directly to Fannie, instead of collecting it themselves, which would be costly.

The housing finance giant is exploring other ways to unlock access to credit for underserved borrowers, Holden said, without further details.

Reporting by Hannah Lang; Editing by Michelle Price and Chizu Nomiyama

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