mortgage trended data frequently asked questions (faqs)

TRENDED CREDIT REPORT

DATAFAQs

AGENDADeadline

What we know nowFAQ’s

ConclusionQuestion/Answer

Fannie Mae’s estimated date of acceptance is the

weekend of

September 24, 2016

WHAT WE KNOW NOW

DISCLAIMER!This information is subject to change as the bureaus and/or Fannie Mae move forward with the project.

WHAT WE KNOW

Equifax will be offering Trended Data in a product called Acrofile

TransUnion will be offering a Trended Data product called

CreditVision(Experian is not offering a trended data product at this time.)

#1: A borrower summary (one for each borrower on joint reports) that totals Balance, High Credit, Minimum monthly payment, and Actual monthly payment per month across all accounts for 24 months.

#2: A tradeline summary broken out by month that totals Balance, High Credit, Minimum monthly payment, and Actual monthly payment for 24 months.

#3: An individual trade summary.

KEY ENHANCEMENTS

WHAT WE KNOW

FAQ’s

“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."

Source: Fannie Mae FAQ’s

“What does trended data do for me, and my customers?”

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, or "transactors." Others use debt and only make the minimum payment, or "revolvers.““Transactors" can be looked upon more favorably.

Source: Fannie Mae FAQ’s

“Is there a benefit to the consumer?

Yes. 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.

Source: Fannie Mae FAQ’s

“Will every tradeline's trended data be reviewed?

No. Fannie Mae is only going to be reviewing trended data on revolving accounts.

Source: Fannie Mae FAQ’s

“Can I order a supplement on the trended data information?”

Yes. It is possible to supplement this information if needed.

Source: Fannie Mae FAQ’s

“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.

Source: Fannie Mae FAQ’s

“How does the amount a borrower pays on their credit card account demonstrate how they will pay their mortgage?”

The trended credit data will be used by the DU risk assessment to evaluate how the borrower manages his/her revolving credit card accounts. A borrower who uses revolving accounts conservatively (low revolving credit utilization and/or regular payoff of revolving balance) will be considered a lower risk. A borrower whose revolving credit utilization is high and/or who makes only the minimum monthly payment each month will be considered higher risk.

To put in perspective, holding all else equal on a loan…Research has shown that borrowers who

are Than borrowers who

Never exceed their limit 75% less likely to become delinquent

Exceeded their credit care limit in the last 12 months

Pay off their credit cards every month

60% less likely to become delinquent

Only make the minimum payment each month

“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.

Source: Fannie Mae FAQ’s

“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.

Source: Fannie Mae FAQ’s

“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 (see Appendix A of the DU Version 10.0 Release Notes).

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.

Source: Fannie Mae FAQ’s

CONCLUSION• Trended data was introduced on the credit report starting in

March, 2016, accessible via a link

• Fannie Mae will begin accepting Trended Data September 24th, 2016

• Equifax has indicated that trended data is not to be used in underwriting decisions during the trial period (Mar-June)

• You will continue ordering your credit reports as you always have, through your LOS, DO/DU, or online

• Trended data offers an opportunity to expand your customer base without increasing overall levels of delinquency

Q&A??

THANK YOU For Attending!

We will keep you updated on this industry change as more information comes available!

Subscribe to our blog: www.datafacts.com

Connect on Linkedin: Data Facts, Inc

Follow us on Twitter: @dflending

Like us on Facebook: “Data Facts Lending Solutions”

REFERENCES• Fannie Mae:

http://www.fanniemae.com/portal/about-us/media/corporate-news/2015/6305.html

andhttps://www.fanniemae.com/content/faq/do-du-release-06252016-faqs.pdf • Transunion:

http://newsroom.transunion.com/fannie-mae• Equifax:

http://investor.equifax.com/releasedetail.cfm?ReleaseID=937216