Fannie Mae Making Rent Count Towards Mortgage Approval
The news of Fannie Mae making rent count towards mortgage automated underwriting system approve/eligible findings is huge news. What this means is if a borrower gets a refer/eligible per automated underwriting system findings (AUS), having rental verification could mean the refer/eligible can turn to an approve/eligible per automated underwriting system findings. The automated underwriting system of the Desktop Underwriter and Loan Prospector (LP) has already been reprogrammed with a new algorithm for Fannie Mae making rent count towards mortgage AUS findings.
Does Fannie Mae Making Rent Count Towards Mortgage Help Applying for a Mortgage AUS Approval?
In this blog, we are going to discuss the news of Fannie Mae making rent count towards mortgage AUS approval will help borrowers who have borderline credit and cannot get a refer/eligible get approve/eligible.
What Is Verification of Rent in Mortgages?
Verification of rent is renters being able to prove they have been making timely monthly rent payments with no late payments for at least 12 months. HUD manual underwriting guidelines on FHA loans require timely monthly payments on all monthly payments for the past 24 months with only one late rent payment in the past 24 months but not the last 12 months. VA manual underwriting guidelines require 12 months of timely payments on all monthly payments and rent payments.
Manual Underwriting Guidelines on FHA and VA Loans
All manual underwriting mortgage borrowers are required to provide verification of rent. Gustan Cho Associates will exempt verification of rent for borrowers who are living with a family rent-free with a living rent-free letter from the landlord’s family member. Otherwise, 99% of mortgage lenders will require verification of rent on manual underwrites.
FHA and VA loans are the only two mortgage loan programs that allow manual underwriting. Both FHA and VA manual underwriting guidelines are almost identical with the exception of late payments. HUD requires 24 months of timely payments. VA requires 12 months of timely payments.
How Do Mortgage Underwriters Look at Rental Verification
Rental verification is a compensating factor if the rent was paid timely in the past 12 months. If the rental payments are similar to the new housing payment of the proposed home purchase with low payment shock, then it is a huge compensating factor.
How Do Renters Get Rewarded For a Mortgage For Timely Rental Payments?
How does rental payment history affect you when going from a renter to applying for a mortgage? Many home buyers do not know the answer to this question, but knowing could be imperative when you decide to buy a home! First-time home buyers have no previous mortgage history. That is when paying your rent on time will help. It is common for consumers to rent before buying a home.
Fannie Mae Is Making Rent Count By Rewarding Timely Renters
Renters who are making timely rent for the past 12 months are getting rewarded by getting an approve/eligible per an automated underwriting system where they would have otherwise not gotten approved. Homebuyers with timely rent payment history are now getting recognized by the automated underwriting system.
Rental Verification Algorithm Benefit Refer/Eligible Borrowers
Fannie Mae making rent count towards mortgage AUS approval means the positive rental payment history for the past 12 months is being entered into the automated underwriting system. The automated underwriting system algorithms have already been reprogrammed to take timely rental payment history into the automated underwriting system findings as a strong compensating factor in its automated findings. With the implementation of Fannie Mae making rent count towards mortgage AUS approval, Fannie Mae said the following:
Fannie Mae making rent count towards mortgage AUS approval means the positive rental payment history for the past 12 months is being entered into the automated underwriting system. The automated underwriting system algorithms have already been reprogrammed to take timely rental payment history into the automated underwriting system findings as a strong compensating factor in its automated findings. With the implementation of Fannie Mae making rent count towards mortgage AUS approval.
Fannie Mae Making Rent Count Toward Mortgage AUS Approval Makes a Difference
In layman’s terms, Fannie Mae Making Rent Count Towards Mortgage AUS approve/eligible findings mean someone with a refer/eligible can now get an approve/eligible per AUS if the timely rental history data is entered in the AUS. Here is a statement issued by Fannie Mae after Fannie Mae making rent count towards mortgage AUS approval has been launched:
