Key Takeaways:
– Fannie Mae’s Multifamily Positive Rent Payment (PRP) pilot program has been extended through December 2024.
– Fannie Mae will cover the cost for property owners who enroll in PRP during the extension period.
– The program helps renters build credit history and improve credit scores.
– Approximately 435,000 participants were in the PRP program during its first year, with over 23,000 renters establishing credit scores.
– Three fintech vendors, Esusu, Jetty, and Rent Dynamics, will continue to participate in the program.
– Renters view consideration of rent payment history as beneficial, with 82% expecting an immediate increase in credit scores and 79% recognizing the financial opportunities of a higher credit score.
– Fannie Mae’s research shows that considering rental payment history can increase mortgage approval rates.
– Fannie Mae began including on-time rent in underwriting decisions in August 2021.
HousingWire:
Fannie Mae announced on Tuesday that its Multifamily Positive Rent Payment (PRP) pilot program, originally scheduled to expire this year, has been extended through December 2024 in light of new survey data and an impact analysis.
As part of the extension and to encourage adoption, Fannie Mae will cover the cost for property owners who enroll in PRP through the extension period.
The program was launched in the fall of 2022, and helps renters build their credit history and improve their credit score as they prepare to enter the housing market or find a new rental.
“We will cover the costs of collecting and disseminating rent payment data for a 12-month period for multifamily property owners/operators of Fannie Mae-financed properties who leverage one of the three approved vendors to collect the data,” Fannie Mae said in a blog post.
Fannie Mae saw approximately 435,000 participants in the PRP program during its first year (September 2022 through September 2023), which helped more than 23,000 renters establish credit scores for the first time.
Renters who had a pre-existing credit profile at the time of enrollment in the program also saw a 40-point increase in their score, on average, by taking positive rent payment history into account.
Three fintech vendors that provide rent payment data — Esusu, Jetty and Rent Dynamics (which was acquired by Entrata over the summer) — will continue to participate in the program, Fannie Mae said.
A survey from Fannie Mae also showed that renters largely view consideration of their on-time rent payment history as beneficial. Eighty-two percent of renters who always pay their rent on time reported that they would expect to see an immediate increase in their credit score if rent payment history was included. Meanwhile, 79% recognize that having a higher credit score will provide them with greater financial opportunities.
The survey found that 78% of respondents said their credit scores would be “more consistent” if rent payment history was considered.
“Rent is often a renter’s largest monthly expense, and credit scores play a huge factor in the ability to pursue financial and economic opportunities, such as obtaining mortgage or car loans, credit cards, or student loans,” Fannie Mae said.
In a research study published in 2021, Fannie Mae found that in a sample of mortgage applicants who were denied a mortgage, 17% could have received approval if their rental payment history had been considered. In August 2021, Fannie Mae began including on-time rent in its underwriting decisions.
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Property Chomp’s Take:
Recently, Fannie Mae announced the extension of its Multifamily Positive Rent Payment (PRP) pilot program until December 2024. The program, initially set to expire this year, has been extended due to new survey data and impact analysis. Fannie Mae will cover the program’s costs for property owners who enroll during the extension period, aiming to encourage adoption.
The PRP program was launched in 2022 and aims to help renters build their credit history and improve their credit scores as they prepare to enter the housing market or find a new rental. By reporting positive rent payment data, the program assists renters in establishing credit scores for the first time and improving existing scores. During the first year of the program, over 435,000 participants were enrolled, with more than 23,000 renters establishing credit scores for the first time.
To collect and disseminate rent payment data, Fannie Mae has partnered with three approved vendors: Esusu, Jetty, and Rent Dynamics. These fintech vendors will continue to participate in the program, ensuring the smooth functioning of the initiative.
The extension of the PRP program comes after a survey conducted by Fannie Mae revealed that renters view the consideration of their rent payment history as beneficial. The survey found that 82% of renters who always pay their rent on time expect an immediate increase in their credit score if rent payment history is included. Additionally, 79% recognize that a higher credit score provides greater financial opportunities. Furthermore, 78% of respondents believe their credit scores would be more consistent if rent payment history was considered.
Rent is often a significant monthly expense for renters, and credit scores play a crucial role in their financial and economic opportunities. Fannie Mae’s research study in 2021 showed that 17% of mortgage applicants who were denied a mortgage could have received approval if their rental payment history had been considered. As a result, Fannie Mae started including on-time rent in its underwriting decisions in August 2021.
The extension of Fannie Mae’s Multifamily Positive Rent Payment program reflects the increasing recognition of the importance of rent payment history in credit scoring. By including this information, renters have the opportunity to build credit and improve their financial prospects. This initiative not only benefits individual renters but also has the potential to positively impact the housing market and the overall economy.
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