Fannie Mae integrates more banking and investment account data into automated underwriting

Fannie Mae has added more upgrades to its automated underwriting system that are aimed at further extending homeownership opportunities for underserved demographics.

Specifically, the enhancements are targeted at simplifying the borrowing process for homebuyers who don’t have a credit score by pulling data from banking and investment accounts. Millions of potential borrowers across the country are considered “credit invisible,” with a disproportionate number of Black and Latino borrowers among them.

According to data from the Consumer Financial Protection Bureau (CFPB), nearly 15% of Black and Latino people are credit invisible, compared to only 9% of white and Asian Americans. Because of such disparities, the new enhancements in Fannie Mae’s Desktop Underwriter system will:

  • Update the eligibility criteria for loans where no borrower has a credit score to align with Fannie Mae’s standard selling guide requirements, which may help more borrowers qualify for a home loan
  • Automate the current selling guide policy requirement to document nontraditional sources of credit
  • Enable an evaluation of a borrower’s monthly cash flow over a 12-month period, which may help their credit-risk assessment

“We believe consumers should benefit from their responsible money management habits and a steady stream of income when buying a home, even if they don’t have an established credit history,” said Malloy Evans, executive vice president and head of single-family business at Fannie Mae. 

“Traditional lending practices make it hard for borrowers with no credit score to access credit, so we’ve taken steps that may help them responsibly qualify for a home loan using data that provides a more holistic view of how they manage their money.”

Integrating banking data into underwriting systems has been a focus of the government-sponsored enterprises (GSEs) of late as they attempt to expand homeownership opportunities for underserved borrowers, including minorities and gig-economy workers. Freddie Mac added a review of borrower bank account data in October, while Fannie Mae president David Benson mentioned at the Mortgage Bankers Association’s Annual Convention & Expo that month that his company was hoping to announce something soon as well.

“We’re really looking forward to using bank-statement data and other pieces of financial data we’ve gathered to be able to qualify people who previously would not have been able to qualify for GSE loans,” Benson said.


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