Fannie Mae is extending its Positive Rent Payment (PRP) pilot program. The program, originally scheduled to expire at the end of 2023, has been extended through December 2024, in light of new survey data and an impact analysis.
As part of the extension, Fannie Mae will cover the costs of collecting and disseminating rent payment data for a 12-month period for multifamily property owner/operators of Fannie Mae-financed properties that leverage one of the three approved vendors to collect data. The PRP program was launched in fall 2022 and aims to help renters build credit history and improve their credit score as they prepare to enter the housing market or find a new rental.
“Building credit can help alleviate challenges that limit a renter’s ability to secure quality rental housing and can help them achieve their financial goals. This extension supports our objective to accelerate the adoption of rental payment reporting across the industry while advancing greater housing equity,” Fannie Mae wrote in a blog post.
Fannie Mae says the first-year results of the pilot program indicate a “trajectory toward better financial health for many renters.” As of September, over 100 property owners, 2,170 properties, and 435,000 units have enrolled in the pilot. To date, 240,00 participants reported rent payments, 23,000 credit scores were established, and nearly 58% of participants have increased their credit scores. Participating renters who already had a credit score and saw an improvement when taking positive rent payment into account had an average increase of up to 40 points.
Fannie Mae reported the three fintech vendors that provide rent payment data—Esusu, Jetty, and Entrata (which recently acquired Rent Dynamics)—will continue to participate in the program.
A survey conducted by Fannie Mae indicates renters believe the consideration of on-time rent payments as beneficial. Over 80% of renters would like their on-time rent payments to be factored into their credit scores, and 82% of respondents who always pay their rent on time believe they would see an immediate increase in their credit score if rent payment history was included.
The survey also found 79% of renters recognize that having a higher credit score will provide them with greater financial opportunities. Seventy-eight percent of renters agree their credit score would be more consistent if rent payment history were included.
“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 wrote.