By Hannah Lang

(Reuters.) – U.S. mortgage giant Fannie Mae is integrating Blend Labs Inc.’s data into its underwriting system to allow lenders to more easily evaluate a borrower’s rental payments history in approving a homeowner loan.

Fannie’s attempt to incorporate rental payments history into the loan approval process is part of President Joe Biden’s push to increase credit access and reduce inequalities in the housing market.

Experts in credit management say alternative data sources, such as rentals, may help lenders assess the creditworthiness borrowers with less credit history.

Fannie Mae is also available Freddie Mac The National Office of the Credit Commissioner (OTC) guarantees over half the country’s mortgages. It must also approve all loans it covers and the originators.

“We think it’s going to allow more first-time home-buyers or aspiring first time home-buyers to responsibly qualify, including those that who have a more limited credit history,” said Steve Holden, Fannie’s vice president of single-family data and analytics.

Approximately 20% of the U.S. population has little established credit history – a group in which Black and Hispanic consumers are disproportionately represented, according to Fannie.

Blend is based in San Francisco and collects third-party information which it shares to lenders. This helps them verify quickly requirements, such as the source of income.

It manages mortgage applications for many major lenders. Wells Fargo (NYSE:) & Co, U.S. Bancorp and Mr. Cooper Group Inc, processing around $5 billion of loans daily on average, it says.

Blend founder and chief executive officer Nima Gomsari stated that many lenders were keen to join the program but were wary about asking borrowers to provide bank statements showing they paid timely rental payments.

“There’s only a few times a year where the CEOs of some of these mortgage companies will call me and say, ‘Hey, how come you guys don’t have this thing yet?’” he said. “This was one of those occasions I got a lot of phone calls.”

Blend integrated bank rental payments transaction data into Blend’s platform, and Fannie integrated the Blend feature into her underwriting system.

Blend users can request that the Fintech transmit payment information directly to Fannie.

Holden stated that the housing finance company is looking at other options to provide credit access for low-income borrowers.