Fannie Mae announced on Tuesday that its Multifamily Positive Rent Payment (PRP) pilot program, originally scheduled to expire this year, has been extended through December 2024 in light of new survey data and an impact analysis.
As part of the extension and to encourage adoption, Fannie Mae will cover the cost for property owners who enroll in PRP through the extension period.
The program was launched in the fall of 2022, and helps renters build their credit history and improve their credit score as they prepare to enter the housing market or find a new rental.
“We will cover the costs of collecting and disseminating rent payment data for a 12-month period for multifamily property owners/operators of Fannie Mae-financed properties who leverage one of the three approved vendors to collect the data,” Fannie Mae said in a blog post.
Fannie Mae saw approximately 435,000 participants in the PRP program during its first year (September 2022 through September 2023), which helped more than 23,000 renters establish credit scores for the first time.
Renters who had a pre-existing credit profile at the time of enrollment in the program also saw a 40-point increase in their score, on average, by taking positive rent payment history into account.
Three fintech vendors that provide rent payment data — Esusu, Jetty and Rent Dynamics (which was acquired by Entrata over the summer) — will continue to participate in the program, Fannie Mae said.
A survey from Fannie Mae also showed that renters largely view consideration of their on-time rent payment history as beneficial. Eighty-two percent of renters who always pay their rent on time reported that they would expect to see an immediate increase in their credit score if rent payment history was included. Meanwhile, 79% recognize that having a higher credit score will provide them with greater financial opportunities.
The survey found that 78% of respondents said their credit scores would be “more consistent” if rent payment history was considered.
“Rent is often a renter’s largest monthly expense, and credit scores play a huge factor in the ability to pursue financial and economic opportunities, such as obtaining mortgage or car loans, credit cards, or student loans,” Fannie Mae said.
In a research study published in 2021, Fannie Mae found that in a sample of mortgage applicants who were denied a mortgage, 17% could have received approval if their rental payment history had been considered. In August 2021, Fannie Mae began including on-time rent in its underwriting decisions.