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Senate Commerce Committee Statement on Senate Resolution No. 47 (New Jersey, 2022)

Summary

This is a Senate Commerce Committee statement to the New Jersey Senate on Senate Resolution No. 47, dated June 9, 2022. The committee reports the resolution favorably. The resolution urges Congress to pass legislation requiring mortgage lenders to consider rent payments when determining people's credit worthiness. The statement says many lower-income renters are disqualified for lack of credit history despite paying rent consistently. It says Fannie Mae has begun to count certain rent payments and cites Fannie Mae data that 17 percent of people who had not owned a home in the previous three years would qualify if rental payments were considered. It adds that New Jersey is limited by federal law that preempts State regulation.

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“Senate Commerce Committee Statement on Senate Resolution No. 47 (New Jersey, 2022).” Archived at Pandemic Darlings, https://pandemicdarlings.com/source-documents/2022-06-09-scm-sr47-s1-a9c7b4e920/, SHA-256 93b27192e3083eff9fbc58f077c40e35c7213b7ac077f26d4a146151a73f471b.

Full text

     SENATE COMMERCE COMMITTEE

                    STATEMENT TO

       SENATE RESOLUTION No. 47

 STATE OF NEW JERSEY
                       DATED: JUNE 9, 2022

   The Senate Commerce Committee reports favorably Senate
Resolution No. 47.
   This Senate resolution urges Congress to pass legislation
requiring mortgage lenders to consider rent payments when
determining people’s credit worthiness.
   When most people purchase a home, money in the form of a
mortgage is borrowed for the purchase from a bank, but many
lower-income people who rent homes in New Jersey are
disqualified due to lack of credit history. Despite little or no credit
history, many renters in the State have demonstrated their
creditworthiness by consistently paying rent to landlords every
month.
   Fannie Mae, a federally backed institution that buys mortgages
from banks and other financial institutions that underwrite
mortgages, has begun to count certain people’s rent payments when
making underwriting decisions.
   Data from Fannie Mae shows that 17 percent of people who have
not owned a home in the previous three years and would not have
previously qualified would qualify if rental payments were
considered on mortgage applications. Of those 17 percent, many
are people of color who have limited credit histories, and who have
been shut out of the housing market for a variety of reasons.
   Though Fannie Mae is taking a step in the right direction, many
other institutions who extend mortgages do not take rent payments
into account when determining a person’s creditworthiness. New
Jersey is limited in its ability to require mortgage lenders to
consider rent payments when making determinations on applicants
by federal law that preempts State regulation.
   If Congress takes action to require more mortgage lenders to
account for rent payments when making decisions on whether to
extend credit to a person who wants to buy a home, it will enable
more people to own their own homes.

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