Freddie Mac is encouraging rental unit operators to report rent payments to the three major credit bureaus.

Freddie Mac is joining Fannie Mae in including timely rent payments into the assessment of homebuyer credit. Fannie Mae's president, Hugh Frater announced a program in August that would allow lenders to use Desktop Underwriter to submit a history of recurring rent payments. The program Freddie Mac just announced appears to go a bit further. The company says it is encouraging operators of multifamily properties to report on-time rent payments to the three major credit bureaus. Less than 10 percent of renters currently see their rental history reflected in their scores. Freddie Mac's initiative incentivizes rent reporting via technology created by Esusu Financial Inc. It will deliver on-time rental payment data from property management software platforms to the credit bureaus and will automatically unenroll renters when missed payments occur, preventing harm to those who struggle financially.  "Rent payments are often the single largest monthly line item in a family's budget but paying your rent on time does not show up in a credit report like a mortgage payment," said Michael DeVito, CEO of Freddie Mac. "That puts the 44 million households who rent at a significant disadvantage when they seek financing for a home, a car or even an education. While there remains more to do, this is a meaningful step in addressing this age-old problem."   To encourage multifamily property owners to participate, the GSE will provide closing cost credits on multifamily loans for owners who agree to use Esusu's platform and has negotiated discounted fees for owners using those services. The platform manages the end-to-end process of reporting rental payments to all three major credit bureaus while ensuring compliance with industry standards. "At present, the most common way for rents to be reported to the credit bureaus is when there is a missed payment that has gone to a collections agency," said Alexis Sofyanos, senior director of Equity in Multifamily Housing at Freddie Mac. "Freddie Mac wants to flip that script, so that renters who pay their rent on time and in full each month get credit for doing so, while also putting in safeguards for the most vulnerable."

Source: Mortgage News Daily