We are about to experience one of the largest shifts in mortgage qualifying that we have had in quite some time.  If you have not heard about Trended Credit Data make sure to read this post thoroughly…

Fannie Mae decided that their newest automated underwriting system release (DU 10.0) would require what is called “Trending Credit Data”.  Not only is this a shift in mortgage qualifying this is a huge shift in credit reporting.  Let me do my best to explain the difference.

Snapshot in Time

Credit Reports, until now, have been the equivalent of a picture…a snapshot in time.

trended credit data

In other words, when we pull a credit report we get only the data as it is at that particular moment.  Sure, we can see if past payment was made on time (or at least within 30 days of the due date) or closed account history, but we can’t see much additional detail than that.  We can’t see if the customer paid their balance off in full.  We can’t see if they made just their minimum payment.  Just if they paid on time or not.

Moving Picture

Well, Trending Credit Data changes that.  Trending Credit is being implemented by Equifax and TransUnion and Experian some time next year.  This Trending Credit Data will not only show what the current reports show but a 24 month history on all credit card, car payment, student loan and mortgage accounts including the actual payment amount that was made.  This now changes from a snapshot to a flip book that almost feels like a movie.

Now the credit report and Fannie Mae with their new DU 10.0 will be able to better assess risk.  What they have found is borrowers who make just minimum monthly payments are 3 times more likely to default than those who pay off credit cards in full each month.  That is valuable information to mortgage companies making a risk assessment.

Fannie Mae Only

So far this is only for Fannie Mae Conventional mortgages only.  But, I am guessing Freddie Mac, FHA, VA and USDA will eventually follow suit.  This is an industry shift in the making.

Fannie Mae’s automated underwriting system Desktop Underwriter (DU) 10.0 is set to be released on September 24, 2016.  From that day forward this new Trending Data will be used on all Fannie Mae mortgages.

Download the Fannie Mae sheet on Trending Credit Data here:  https://www.fanniemae.com/content/fact_sheet/desktop-underwriter-trended-data.pdf

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