FHA Moves to Include On-Time Rental Payments for First-Time Buyers

Abstract

Lenders originating purchase mortgages for FHA insurance will be required to obtain verification of the borrower's timely rental payments and indicate it on their TOTAL Mortgage Scorecard, which the FHA uses to evaluate borrower credit history and mortgage application information when underwriting loans. The FHA's move follows on the heels of an announcement by Experian, one of the main credit bureaus, earlier this month that its Experian Boost program would offer a way for consumers to add qualifying, positive residential rental payments directly to their credit file. The credit bureau said consumers who would see the biggest improvement-of about 14 points-are those with thin credit files or low FICO scores. Fannie Mae launched this week a "Multifamily Positive Rent Payment Reporting" pilot program, which is aimed at helping renters build their credit histories and boost their credit score. The program allows eligible property owners to share on-time rent payment data through a system to the three major credit bureau's so it can be included in the renter's credit profile. In 2021, Freddie Mac announced a new program to help renters build up their credit profiles and help make them more creditworthy. The initiative provides a means for owners or managers of multifamily properties to report on-time rental payments to the three major credit bureaus.