Right now, it’s a gig economy for somewhere around 20% to 30% of the US workforce. Rather than having routine hours and a stable income, these workers are operating on commission and setting their own hours. Such people may be working for a company like Uber or Airbnb, or may be self-employed. While commission-based work can sometimes rake in the numbers on a good deal, sometimes you can go months or even more than a year without any income. To compound the issue, mortgage lenders are often looking for stable income — getting $1 million one day and nothing the next 6 months doesn’t enable you to qualify for a mortgage.
Two of the biggest mortgage lenders, Fannie Mae and Freddie Mac, want to change that. Fannie recently conducted a survey of 3000 lending executives, 95% of whom said current guidelines don’t count much of an increasing number of applicants’ earnings. In order to improve “access to credit,” both companies are seeking to change their guidelines to better match the gig economy. The two biggest obstacles are maintaining high quality loans and low risk of default, and automation. Freddie thinks it has a solution to the latter. A possible solution to the former is to reanalyze whether changing jobs constitutes a disruption of income. It’s entirely possible that the applicant is doing the same thing they’ve been doing for years, albeit with three different companies.