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 growing market. 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.
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