On Tuesday, Fannie Mae announced innovative enhancements to its automated underwriting system to expand eligibility for borrowers without credit scores. The update is part of ongoing efforts to reach historically underserved populations better and equitably serve renters and homeowners. The enhancements update the eligibility criteria for loans where a borrower doesn't have a credit score to align with Fannie Mae's standard Selling Guide requirements. This will enable an evaluation of a borrower's monthly cash flow over 12 months to potentially enhance their risk assessment and simplify the mortgage process by automating the current Selling Guide policy requirement to document nontraditional sources of credit.

"Fannie Mae's preliminary research has shown that assessing a borrower's cash flow activity through bank statement data can make more predictive risk assessments, especially for consumers with no or limited credit history," the announcement said.

Last week, during its quarterly update meeting, the HUD Office of Policy Development & Research (PD&R) discussed the impact of institutional investors on U.S. housing markets. During the event, PD&R shared research and data highlighting what communities have done to preserve affordable housing. Activity by institutional investors has increased since the start of the pandemic, and often these investors have portfolios of more than 1,000 properties. This increased activity presents an additional strain on the existing barriers for first-time homebuyers and racial-wealth gaps.

"Institutional investors have access to resources that make them impossible to compete with. This is especially true for minority first-time homebuyers, who already face institutional barriers," said HUD Secretary Marcia Fudge. "HUD has taken steps to ensure that our defaulted assets will land in the hands of nonprofits or individual owners, but this is a much bigger problem that will take everyone coming together to figure out how to sustain housing that people can afford."

On Wednesday, the House of Representatives passed the Community Disaster Resilience Zones (CDRZ) Act of 2022, clearing the path for signature by President Biden. The Senate already passed the bill earlier this year. The bipartisan bill seeks to improve equity and resilience to natural disasters within vulnerable communities. The legislation establishes a CDRZ classification for communities at risk of natural disasters that are also considered to have limited community resources. It further authorizes FEMA to provide financial, technical, and other assistance to CDRZ-designated communities that plan to perform a resilience or mitigation project to reduce natural hazards. The act also reduces the cost share for CDRZ-designated communities from 25 percent to 10 percent under FEMA's pre-disaster mitigation program. The bill will help direct public and private sector resources to communities most in need of targeted assistance to improve resilience.

HUD awarded $30 million in funds to hire and maintain service coordinators for residents of Public and Indian housing. Service coordinators assess residents' needs and help coordinate resources for residents within the community. The coordinators also help residents make progress on their economic goals. HUD will distribute the awards among 111 public housing agencies, Tribally Designated Housing Entities, resident associations, and nonprofit organizations. The awards will fund 135 service coordinator positions. The program funding also raises the maximum salary for service coordinators to provide a more consistent service and address existing provider gaps.