The ‘Gig Economy’ and Mortgage Lending

The gig economy is growing and reshaping how Americans think about work and self-employment, said Fannie Mae, Washington, D.C.

The company’s monthly National Housing Survey found nearly one-fifth of adults in the U.S. have provided a gig economy service–such as transportation, lodging and food delivery–and many of them want to buy homes. But due to its on-demand nature, the gig economy income stream can be less stable.

Fannie Mae’s Economic & Strategic Research Group surveyed senior mortgage executives to understand their views on using gig economy income in the mortgage underwriting process. Key findings include:

–71% of lenders said borrowers have applied for a mortgage using gig economy income over the past year.

–89% expect the number of borrowers who would want to use gig economy income to qualify for a loan to grow in the next few years.

–68% think accepting gig economy income will help low- to moderate-income consumers access mortgage credit.

–95% said it’s difficult to use gig economy income to approve mortgage applications with today’s lending practices.

–Top barriers include unpredictability and instability of gig economy income, investor requirements, and underwriting criteria standardization.

–By comparison, 69% of lenders say current underwriting guidelines for self-employment income verification are about right, while 24% suggest easing existing standards.

The report can be found at http://www.fanniemae.com/resources/file/research/housingsurvey/pdf/may2018-topic-analysis-presentation-gig-economy-mortgage-lending.pdf.