The economic and lending environments are changing. There are new segments of the population that are emerging that include millennials, minorities, immigrants, and rural dwellers, and the typical FICO score evaluation just won't cut it for lenders, and other data avenues must be considered to accommodate these new borrowers.
Theses populations require a more holistic approach to risk assessment when considering eligibility for a mortgage loan. According to a report from TransUnion, alternative and trended data is the only way lenders will be able to reach these untapped borrowers.
Despite popular beliefs, the millennial generation will eventually want to transition from their fast-paced, renter lifestyle into a single-family home with a mortgage, but the real surprise is where these young homebuyers are choosing to settle down. A survey from the National Association of Realtors found that the share of millennials buying in an urban or central city area fell to 17 percent from 21 percent a year ago in this year’s survey, while only 10 percent purchased a multifamily home compared to 15 percent a year ago.