This study updates mortgage market developments in the use of cash-flow information from bank accounts and utility, telecommunications, and rental payments history. The report highlights issues concerning data collection, standardization, and consumer protection regulation when using non-traditional financial data sources, as well as the impact of pricing, servicing, and regulation in determining whether the use of such data sources enhances racial equity.

Building on their report about the use of utility, telecommunications and rental payments history for credit underwriting, FinRegLab and the Urban Institute hosted a webinar in April 2022 to examine the current state of play and the evolving policy landscape. Leaders from the field discussed data access and quality and how to build more robust scoring and underwriting models.

“Even though credit scores play a key role in determining who gets a mortgage and at what terms, the current credit system disadvantages a disproportionate share of low-income consumers who don’t have enough information in their credit files.”

This source collects recent trends in short-term forbearances in the mortgage market but also notes areas in which additional data and consumer outreach are urgently needed. In particular, it highlights that about 530,000 homeowners who became delinquent after the pandemic did not take advantage of forbearance, despite being eligible to ask for relief under federal legislation. An additional 205,000 homeowners obtained an initial forbearance that expired in June or July, but did not seek to extended it and have since become delinquent.

The blog analyzes survey results from the U.S. Census Bureau that provide the first real-time, national data on housing payments disaggregated by race and ethnicity, income, age, and other household characteristics. Among both renters and homeowners, African-Americans, Latinos, and low-income households were more likely to miss or defer housing payments in May than other groups.

The economic effects of COVID-19 are beginning to narrow lending in the mortgage market and point to a return to the period between 2010 and 2013 in which only borrowers with nearly pristine credit could obtain a mortgage.