NAMB co-hosts industry symposium at Brookings InstitutionMortgagePress.comexpanding homeownership, limited or non-traditional credit histories
The National Association of
Mortgage Brokers recently joined the Brookings Institution's Urban
Markets Initiative to host an unprecedented industry symposium
aimed at expanding homeownership opportunities for borrowers with
limited or non-traditional credit histories. An estimated 35 to 54
million Americans lie outside the credit mainstream, with limited
or no access to the mortgage lending process, although many
demonstrate a solid track record of paying their rent, utilities
and other financial obligations.
"These people, and millions of others, are faced with incomplete
credit files or credit scores that remain artificially low due to
unreported credit-related activities," said NAMB Communications
Committee Chair Ginny Ferguson. "We would like to see
non-traditional credit databases established so there can be
automated credit analysis for this population. If we can create
this type of system, it would open doors to an extremely large and
underserved segment of consumers."
Examples of those affected include immigrants trying to
establish themselves in the United States, people who are recently
widowed or divorced, and individuals who opt to avoid the use of
credit cards, preferring cash-based transactions.
"Mortgage brokers and lenders attempting to assist these
borrowers today must perform a lengthy manual underwriting process,
which is often subject to tighter guidelines, longer review periods
and other hurdles which deter many from reaching out to this
segment of the population," added Ferguson.
Ferguson explained that the symposium focused on placing
non-traditional borrowers into a more mainstream credit channel by
developing new methodologies to suit their profile. She said
alternative credit models are emerging in the marketplace, such as
First American's Anthem and FICO's Expansion Score. These
models attempt to measure the creditworthiness of non-traditional
borrowers and help lenders understand the underlying risk of this
Ferguson noted that NAMB also has established a partnership with
Pay Rent Build Credit (PRBC), a
national credit bureau that specializes in serving individuals with
limited credit history.
A PRBC report that merges Equifax, Experian and TransUnion credit reports and
scores with a PRBC bill payment history and a Bill Payment Score
(BPS) can be ordered. PRBC reports and the BPS are used to
supplement a traditional credit report and score, or, in the
absence of one, to gain a more complete and accurate risk
assessment of an applicant.
For more information, visit www.namb.org.