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In the world of lending and credit, it’s important to stay up-to-date with the latest developments. In recent news, there have been significant changes in credit reports that present new opportunities for non-QM lenders. Additionally, the removal of unpaid medical collections under $500 from consumer credit reports has sparked both excitement and skepticism. In this blog post, we’ll explore these changes and their potential effects on borrowers, lenders, and the housing market.

For those who doubted the impact of making their voices heard, here’s some good news: the loan level price adjustment for debt-to-income ratio (DTI), which was scheduled to roll out in August, has been scrapped. This sudden reversal demonstrates the power of raising concerns and advocating for what’s right. Kudos to all the non-cynics who actively participated in this process.

Building upon the success of preventing the DTI LLPA, it’s crucial to continue our efforts by signing the petition to roll back the first round of loan LLPA’s. As an election looms on the horizon, it’s remarkable to witness how politicians can support changes that are fair and just, rather than solely self-serving. Your voice matters, and together, we can influence positive transformations within the lending industry.

Now, let’s delve into the major changes coming to credit reports and how they can create significant opportunities for non-QM lenders. Oaktree, your trusted partner in the non-QM sector, is here to help you seize these opportunities and conquer new market shares. Make Oaktree your non-QM partner and reach out today to leverage these upcoming changes that will revolutionize your originations.

Last week, Equifax, Experian, and TransUnion announced a noteworthy decision: they have eliminated unpaid medical collections under $500 from consumer credit reports. This change raises a few eyebrows. Are there really medical collections worth less than $500? Nonetheless, it’s time to shift our focus to an intriguing study conducted by a government agency.

In its recent Data Point released on April 26, 2023, the Consumer Financial Protection Bureau (CFPB) examined the consequences of removing medical collection trade-lines. The study analyzed credit reports from 2012 to 2020 and discovered a significant improvement in credit scores and credit availability when medical collection trade-lines were eliminated.

Believe it or not, removing collections you owe from your credit report increases the likelihood of securing a loan. This begs the question: if the goal is to lend more money, why rely on credit reports in the first place? According to the data point study, not disclosing defaulted accounts on a credit report effectively misleads lenders about a person’s creditworthiness. Perhaps it’s time to reevaluate the purpose of credit reports and consider lowering standards while remaining transparent about borrowers’ intentions.

The data point report revealed fascinating insights regarding the impact of medical collection trade-line removal:

  1. Approximately 22.8 million consumers will witness the removal of at least one medical collection trade-line from their credit reports.
  2. Consumers experienced credit score increases ranging from 21 to 32 points during the first quarter after their last medical collection trade-line was removed. This boost enables access to credit at lower interest rates and offers advantages during rental screenings and employment background checks.
  3. Six quarters after the removal of the last medical collection trade-line, consumers’ available