New Credit Scoring System – Fannie Mae

October 19, 2015, Fannie Mae announced that beginning mid–2016, it will require mortgage lenders to use trended credit data when underwriting single-family home loans.

What does this mean? Lenders will be able to see the actual payment amounts that borrowers make to their debt balances, versus only being able to see the borrower’s total debt amount. For example, underwriters will now be able to see if a balance is paid in full every month or if a borrower is only making the minimum payments, giving them a more dynamic view of a borrower’s credit history.
“With these two dramatic steps, Fannie Mae is helping to make the home mortgage market smarter, safer, and open to more consumers,” said Craig Crabtree, general manager of Equifax Mortgage Services. “Increasing the use of trended data will help improve the evaluation of risk and reward the responsible use of credit, while incorporating Equifax verification services will help streamline the underwriting process.”
As for other news, this week’s Economic Calendar was a light one. Recent data has suggested that the pace of economic growth in the U.S. is slowing, yet the US economy appears to be strong and stable. Let’s take a look:


The US Housing Market Index is very strong with overall conditions up a solid two points and housing starts greatly exceeding expectations. All regions of the US improved with the West experiencing the strongest gains of 11 points.


Both the Bloomberg Consumer Comfort Index and the monthly Consumer Sentiment Index from the University of Michigan demonstrate that Americans are largely quite confident about their personal financial situations and the status of the US economy. In fact the Bloomberg Index is at its highest reading in five years and the University of Michigan report is at the highest point in six years.


One reason for the great feelings from consumers is the state of the US job market. While some analysts have complained about the lack of overall job creation, the fact is that the new jobs that are being created are lasting. Claims for unemployment benefits, already at historic lows, dropped even lower over the past two weeks. One persistent problem related to jobs however is the historically low labor participation rate. There are jobs available, yet for reasons analysts are uncertain of, many Americans are choosing to stay unemployed.


Both the Producer Price Index and the Consumer Price Index over the past two weeks indicate that there is no upward pressure on prices. In fact with oil and gas prices down, the bigger concern among analysts is for downward pressure on prices.


Due to weakness in China and Europe, manufacturing continues to drop. Fortunately, for the overall US economy, manufacturing is a much smaller component of the economy than it was previously. The manufacturing sector will always be at the mercy of the global economy.

Retail Sales

The surest measure of consumer confidence is the monthly retail sales report. For September retail sales were positive with particular strength in motor vehicles, restaurants and clothing sales.

The opinions expressed here within are my own completely independent of BHGRE Coccia Realty and its owners and subsidiaries.


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Raymond Ciampaglia, Realtor®

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Better Homes and Gardens Real Estate | Coccia Realty
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