Fannie Mae Pilots ‘Positive-Only’ Rent Payment Reporting Program

Photo courtesy of Fannie Mae

In an effort to help renters build credit histories and improve their credit scores, Fannie Mae has launched its Multifamily Positive Rent Payment Reporting pilot program. Starting this week, eligible multifamily property owners can share timely rent payment data through a vendor network to the three major credit bureaus for incorporation in the renters’ credit profiles.

Since on-time rent payments are rarely included in credit reports, they usually don’t contribute to a consumer’s credit score, which can be a disadvantage to renters who make their payments on time. The pilot program is part of Fannie Mae’s ongoing solutions to bolster equitable access to credit for more consumers and remove obstacles in their housing journey, whether they continue to rent or are seeking to become homeowners. It also complements Fannie Mae’s existing practice of helping lenders incorporate positive rent payments in the single-family mortgage credit evaluation process through its Desktop Underwriter feature included in its automated underwriting system since September 2021.

Described as a “positive-only” initiative, renters who miss a payment are automatically unenrolled to preserve their credit standing and renters can opt out of the pilot program. Fannie Mae will cover the costs of collecting and sharing the rent payment data to Equifax, Experian and TransUnion for a 12-month period for multifamily borrowers who leverage one of the three approved vendors to collect the information. Esusu Financial, Inc., Jetty Credit and Rent Dynamics are the approved vendors that will collect the data from multifamily property owners and format it for dissemination to the credit bureaus.

Reducing Racial Disparities

Michele Evans, executive vice president and head of multifamily, Fannie Mae, said in a prepared statement about 20 percent of the population in the United States has little to no established credit history and black and Latino/Hispanic people are disproportionately represented in that group. Of those with a credit score, a disproportionate number are black consumers with subprime credit scores. Evans said those imbalances reinforce racial disparities in access to credit and quality affordable housing among renters and homeowners. She said absence of sufficient credit history reduces a renter’s ability to access housing in higher-opportunity neighborhoods, obtain a mortgage and attain lower cost credit for auto, education and other loans. Increasing adoption of positive rent payment reporting can help more consumers establish a strong financial and credit foundation.

A survey released in April by TransUnion found more than half the 2,039 renters polled were aware their rental payments could be reported and were “at least somewhat” interested in doing so. The number was higher for GenZ respondents—about 60 percent said they were aware of and interested in having their payments reported. And 27 percent stated they already allow their rents to be reported. The TransUnion survey found that more than 70 percent of those who were having their on-time payments reported by their landlords were seeing their credit scores improve.

Reporting rent payments works for landlords as well. The survey found an increasing number of multifamily property owners were aware of the practice. Of the 353 multifamily executives surveyed, 27 percent had knowledge of positive rent payment reporting and one third of them were already doing so. That number had increased from 2019 when only 17 percent stated they were reporting rents to credit bureaus.

Jeffrey Brodsky, vice chairman of Related Cos., said in prepared remarks about the new Fannie Mae program that Related Affordable has seen what on-time credit reporting can do to help residents improve their financial health. Brodsky said the company was excited to work with the pilot program and to see similar programs expand to have a greater impact on more renters.

Other multifamily executives told Multi-Housing News recently their companies were already using positive rent payment reporting programs. Wasatch Premier Communities said it adopted a rental payment reporting system in 2015 by partnering with RentDynamics’ RentPlus. Greystar said it was the first to market with rent reporting and complete identify theft protection. The property management firm was instrumental in developing and pioneering a product by Resident-Link, the first company that enabled residents to build and establish their credit. Resident-Link is incorporated within RentCafe, which uses Experian RentBureau to include positive rental payment data in Experian credit reports.