Fairview Lending comments on the new credit model that will soon affect mortgages nationally
One of the big trends coming up in residential mortgages is “trended credit data,” said Glen Weinberg, partner and COO of Fairview Commercial Lending, a hard money lender specializing in private money loans and non-bank real estate loans in Georgia, Colorado, Illinois and Florida, “That is going to be a big change to the credit industry and mortgages.”
In late 2015, Fannie Mae announced a big change to the mortgage industry with the introduction of “trended credit data” to the underwriting process. The new model, which will begin June 25th, is expected to have a big impact on borrowers.
“In the past, when you did a credit report, it looked at all of your revolving accounts, credit cards, etc. and says, okay, what is your utilization of those accounts? The new model takes into account not just how much you are using on the accounts, but over the last two years, how well you have paid those accounts,” said Weinberg. Those who pay their credit card bill in full will be considered lower-risk compared to those who just pay the minimum payment. “People who might have had good scores before because they were not using their credit, if they’re not paying in full, it’s going to be problem,” he said. Also, self-employment will become a large factor in the decision, as individuals who are self-employed will now be considered higher-risk. Trended credit is going to be a really big change to the market, he said.
In late 2015, Fannie Mae announced a big change to the mortgage industry with the introduction of “trended credit data” to the underwriting process. The new model, which will begin June 25th, is expected to have a big impact on borrowers.
“In the past, when you did a credit report, it looked at all of your revolving accounts, credit cards, etc. and says, okay, what is your utilization of those accounts? The new model takes into account not just how much you are using on the accounts, but over the last two years, how well you have paid those accounts,” said Weinberg. Those who pay their credit card bill in full will be considered lower-risk compared to those who just pay the minimum payment. “People who might have had good scores before because they were not using their credit, if they’re not paying in full, it’s going to be problem,” he said. Also, self-employment will become a large factor in the decision, as individuals who are self-employed will now be considered higher-risk. Trended credit is going to be a really big change to the market, he said.
