MEMPHIS, TN--(Marketwired - August 30, 2016) - Singing the blues over more changes heading your way?
Julie Wink, Data Facts' Executive Vice-President, knows this change is difficult to digest for the mortgage industry. "Many mortgage professionals are not sure about the addition of trended data on mortgage credit reports, how it affects them, and how to deal with it. The reality is that mortgage credit trended data is a shock wave to the industry, and is causing even more changes for mortgage originators who have already been handed their fair share."
Data Facts, a nationwide provider of mortgage lending solutions, scoured their sources to answer some of the biggest, most common questions about trended data information...and what it means for mortgage professionals and their clients in reaching their goals of home ownership.
What is mortgage trended data?
The definition is "An enhanced credit report with new, valuable data fields, including Actual Payment Amount, and up to 30 months of detailed account history for each tradeline."
Yeah, yeah, so what is the point?
Rory Tipton, the Data Facts' Account Executive in Oklahoma and Arkansas, lays it out in laymen's terms. "The main goal of trended data is to separate "transactors" from "revolvers" in pursuit of a more predictive analysis of borrowers. Some consumers use credit but pay it off every month. These people will be designated as "transactors." Others use debt and only make the minimum payment, who will be "revolvers." Trended data information will show originators which designation their borrowers receive." This way, "transactors" can be looked upon more favorably.
Is there a benefit to the consumer?
Yes. The addition of trended data on mortgage credit reports is coming about because Fannie Mae wants a more comprehensive view of borrower's historical payment performance. Consumers with little or short credit histories who have managed their payment history wisely would have previously probably shown up as non-prime. Now, they can benefit from the addition of mortgage trended data on credit reports.
What do I need to do to receive the new mortgage credit trended data credit reports?
Alison Mitchell, the Account Executive for the Texas region, shares. "Mortgage originators don't need to do anything. Your credit report provider will handle everything, and you will begin seeing the trended data information on every credit report, if you haven't already."
Will every tradeline's trended data be reviewed?
No. Fannie Mae is only going to be reviewing trended data on revolving accounts.
Does trended data have an impact on the credit score?
No. Trended data is for underwriting purposes, and is not figured into the mortgage credit score. The scoring model will remain unchanged.
Are all three bureaus supplying mortgage trended data?
No. Equifax and Transunion ARE adding trended data on their reports, however, Experian is NOT. There is no ETA on when or if Experian will add it to their reports in the future.
Will trended data be available on all tradelines?
Yes, as available. Fannie Mae will only be utilizing trended data from revolving accounts in underwriting decisions. If the creditors do not supply this information, the bureaus won't be adding it to the credit reports.
Can I order a supplement on the trended data information?
Yes, it is possible to supplement this information if needed.
Will loans for borrowers that make only the minimum payment on their credit card each month be able to receive an Approve recommendation from DU?"
Yes. The use of the actual payment information will impact the analysis of the borrower's credit. However, the actual payment information is used in just one of the credit risk factors analyzed by DU
DU will continue to perform a comprehensive evaluation of all of the credit and non-credit risk factors on the loan to determine the recommendation.
Does the amount a borrower pays on their credit card account actually help predict how they will pay their mortgage?
Yes. Research has shown that borrowers who pay off their credit cards every month are 60% less likely to become delinquent than borrowers who only make the minimum payment. (Source, Fannie Mae).
Do any of the changes made in DU Version 10.0 apply to FHA or VA loan casefiles underwritten through DU?
No. The DU Version 10.0 updates only impact conventional loans, not FHA or VA loans underwritten through DU for Government Loans. Lenders will not see the updated guidelines or messages on their FHA or VA loan casefiles.
Hopefully, these mortgage trended data FAQs helped address your concerned and clarified the issue. Trended data information is expected to affect loans September 24, 2016. Feel free to contact Data Facts with any additional questions that you need addressed.
Julie Wink adds this encouragement to the mortgage professionals who are dreading another change. "Hang in there! Trended data won't be difficult to accommodate, and you will be adept at interpreting it in no time!"
About Data Facts, Inc.
Since 1989, Data Facts, Inc. has provided trusted information to mortgage lending and Human Resource professionals to reach sound lending and hiring decisions. Headquartered in Cordova, TN, the company maintains a national footprint and stays on the forefront of industry regulations. This insight allows them to provide a suite of comprehensive solutions to advance their clients' efficiency. Their dedication to operational excellence and personalized support has solidified them as an industry leader for over 27 years.
Their commitment to above industry standards is proven by their NAPBS accreditation, sustaining SOC 1 and SOC 2 certifications, all staff members upholding FCRA certification, and maintaining active roles on the NCRA and multiple MBA boards.
In addition, Data Facts, Inc is certified by the Women's Business Enterprise National Council (WBENC) as a women-owned business.
For more information, please contact Data Facts, Inc. at 901-685-7599 or email email@example.com. Subscribe to their lending solution or background screening blog follow them on Twitter at @dfscreening and @dflending, and connect on LinkedIn at Data Facts, Inc. to stay abreast of industry updates.