NAR & HUD Agree to Amend Credit Criteria

The National Association of Realtors was not messing around April 1st when they co-hosted a "Credit Access Symposium" with the Asian Real Estate Association of America and National Association of Hispanic Real Estate Professionals.

The top priority for all groups present was how to incorporate "non-traditional" data into the credit evaluation process, so more Americans may qualify for home ownership.

Following the event, NAR commented that the housing and lending industries are challenged by "changing technology, lifestyles, and demographic trends in the U.S., because up-and-coming minority and millennial consumers don’t use credit in the same way households did in the past."

NAR President Chris Polychron noted that "If lenders and government-sponsored enterprises were to adopt alternative credit scoring methods, such as FICO 9 and VantageScore 3.0, they could expand access to mortgage credit without dramatically increasing risk in the housing market."

Of course, any talk of restructuring the lending industry brings on a panic. Comments attached to articles covering this symposium express concern that broadening loan evaluation criteria will sooner or later land us right back to a crisis... of 2008 proportions. "Remember when you allowed people to buy homes without verifying the validity of their income or assets? How did that go over?" writes Bob, "Is allowing an additional small number of people who do not conform to the rules that work, worth gutting the entire housing industry AGAIN?"

Jim Park, former chair of AREAA, feels that "these critical efforts to expand credit to more minority and immigrant consumers" would reverse the "unfortunate" downturn in homeownership nationally.

Julian Castro, the Secretary of HUD, acknowledged a longstanding "disconnect" between how data is analyzed for mortgage loan approval and the "responsibility folks have shown in their lives that would indicate-- or be predictive of-- their future behavior."

How "non-traditional" data would be incorporated to the credit scoring/reporting process was not established at the symposium, and will likely take years to go into effect. To learn about the current criteria for mortgage loans, Team Gale recommends getting in touch with the great brokers, like Grace Bass or Ashley Hales, at Alpha Mortgage.

If you're already pre-qualified and in the market for a new home, second home, or investment property, speak to our on-duty agent at 910-541-1212 today!