Have you heard of “Trended Data”?
FannieMae’s Desktop Underwriter will require Trended Credit Data with the release of DU 10.0 on September 24, 2016. (This was originally scheduled for June 24th but was postponed)
Trended credit data will show if a client carries a balance every month or if they pay their credit cards in full at the end of the month. The reasoning is all about risk. Research has shown that borrowers that have never exceeded their limit are 75% less likely to be delinquent than borrowers that exceeded their limit in the past year. Borrowers who pay off their credit card every month are also 60% less likely to become delinquent than borrowers that only make their minimum payment for the month. DU will only look at the data on revolving credit card accounts and only for the most recent 24 months. FNMA says that the percentage of Approve/Eligible findings will not be affected by this change yet it says it “enhances the revolving utilization decisioning portion of DU”
This new reporting will not change credit scores, but in my opinion- it will probably be a piece of scores in the future. While FNMA says it will not affect DU findings, I find that hard to believe since it is required data that will enhance the ‘decisioning’. We will probably find loans that are tight on ratios or credit scores may receive a “refer” finding, or possible that we will see a positive light for loans with tight ratios and borderline scores could possibly flip to “Approve/Eligible” findings if the past 24 months show favorable trended data. We will have to wait and see.
This will not be part of FHA, VA, USDA or LP findings – only FNMA, but it is very likely we will see it filter to the other agency underwriting engines in the future. (Fannie is the biggest player in the mortgage world)
There are a few other pieces of DU 10.0 – some clarifications when a borrower owns 5-10 financed properties and there will be the ability to offer conventional financing for borrower’s without Credit scores. As of now a borrower must have a minimum score of 620 for a conventional mortgage.… More on this as it comes available.
Of course this is will all come at a cost to the consumer: On average a Joint report (Husband and wife) now costs about $27 while an individual report is about $15 per borrower. We will see these climb significantly to about $62/$49 (J/I).
If you ever have any questions, please do not hesitate to give me a call
Rob
Robert Rauf
Mortgage Loan Originator NMLS# 248937
http://www.homebridge.com/RobertRauf
or my blog: http://activerain.com/blogs/rrauf
Office:
RRauf@HomeBridge.com
Since 1987 I have been helping my clients fulfill their dream of home ownership! HomeBridge Financial Services, Formerly REMN, HomeBridge Financial Services is located at 16 Madison Avenue, Building 2 Suite 2D Toms River, NJ 08753. NMLS #6521. New Jersey Licensed Lender and Mortgage Banker #L041053. Visit www.Homebridge.com for more information. NJ Mortgages, New Jersey Mortgages, Mortgages in NJ, mortgage in New Jersey, Mortgages in New Jersey, Toms River NJ 08753, Toms River NJ 08755, Brick NJ 08723, Brick NJ 08724 Mortgage in Ocean County NJ, Mortgage in Monmouth County NJ, Jackson NJ 08527, Howell NJ 07731, Lacey 08731 08734, Beachwood Bayville , Manchester 08757 08733, Manahawkin 08050, Robert Rauf is a Licensed Mortgage Loan Originator in New Jersey.
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