© Reuters.
Fannie Mae has extended its Multifamily Positive Rent Payment (PRP) pilot program through December 2024, aiming to bolster the credit profiles of renters by including their timely rent payments in credit evaluations. This initiative, which began in the fall of 2022, reflects a strategic effort to bridge the gap in credit reporting that often disadvantages lower-income renters and renters of color.
The PRP program allows landlords to report on-time rent payments, thereby helping renters establish or improve their credit scores. Since its inception, the program has enrolled about 435,000 rental units across more than 2,170 properties financed by Fannie Mae. These properties are managed by over 100 different entities.
Key highlights from the program’s first year include:
- Assistance to over 23,000 renters in establishing credit scores for the first time.
- An average credit score increase of 40 points for renters who already had credit profiles.
- A survey indicating strong renter support, with over 80% preferring their rent payments be included in their credit scores.
Fannie Mae’s decision to continue funding the collection and distribution of rent payment data comes after recognizing the substantial impact such information can have on financial opportunities for renters. The organization’s research found that 17% of mortgage applicants who were denied could have been approved if their rental payment history had been considered.
By extending the PRP program, Fannie Mae aims to reduce tenant turnover and eviction rates while addressing long-standing obstacles to fair credit access. The extension announcement was made today via a blog post and aligns with Fannie Mae’s commitment to facilitating home ownership and financial inclusion. Since August 2021, Fannie Mae has incorporated on-time rent payments into its underwriting decisions, reflecting a broader industry trend toward acknowledging rent payment history as a significant component of financial responsibility.
InvestingPro Insights
Based on InvestingPro data, Fannie Mae (FNMA (ST:)) has a market capitalization of $4.1 billion and a high P/E ratio of 713, suggesting that the stock is currently trading at a high earnings multiple. This aligns with one of our InvestingPro Tips which indicates that FNMA is trading at a high earnings multiple.
Another InvestingPro Tip reveals a declining trend in FNMA’s earnings per share. This could be a point of concern for potential investors and may warrant further investigation. However, it’s important to note that FNMA has seen a strong return over the last three months, which could signal a positive trend moving forward.
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