Freddie Mac announced on November 4 a new initiative to encourage operators of multifamily properties to report on-time rental payments to help renters build credit. According to the announcement, fewer than 10% of renters see their on-time rental payment history reflected in their credit scores. Credit scores have often inhibited low-income families, particularly those in communities of color, from being able to acquire loans to obtain or preserve housing or being able to rent a unit in an apartment with minimum credit score requirements. Reporting timely payments can allow more renters to build credit and help limit the barriers to housing that credit scores have presented.
Freddie Mac will provide closing cost credits on multifamily loans for rental property owners who agree to report on-time rental payments through Esusu Financial Inc. Renters will automatically be unrolled when missed payments occur, preventing harm to those who may face financial burdens.
“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.”
Read about the initiative at: https://bit.ly/3o1L4CJ
More information about Fannie Mae, Freddie Mac, and Housing Finance Reform is on page 3-15 of NLIHC’s 2021 Advocate’s Guide