- Key Insight: Find out why some major mortgage lenders are signing on for FICO's bundled pricing and how much another prominent player says VantageScore has been saving them on certain loans.
- Expert Quote: "A 740 classic FICO isn't necessarily the same risk as a 740 VantageScore loan." — Sandra Thompson, former director, Federal Housing Finance Agency Overview bullets generated by AI with editorial review.
Some lenders have signed up for FICO's bundle while another one has found savings in government-sponsored enterprises' unified loan pricing for VantageScore 4.0, highlighting new drivers for how the industry is making choices around credit metrics.Fairway, Movement and Rate reported Friday that they have committed to
"This demonstrates how additional flexibility can translate into meaningful benefits for our customers," Brian Clark, director of product and pricing at CCM, said in a press release, while noting that it's part of broader moves to fully use government-related market options to this end.
CCM also is removing a 80% loan-to-value ratio cap it has had as an overlay for Fannie Mae and Freddie Mac loans, allowing some borrowers to exceed this, and also giving borrowers broader access to Department of Veterans Affairs-guaranteed loans.
Meanwhile, Rocket Mortgage also has found VS4 offers some advantages in a five-month test of 1.4 million customers, CEO Jay Bray said at
"We saw higher approval. We saw customers being able to save money, and so we made the choice to move in that direction for certain pieces of our portfolio," he told listeners to the conference, which HFS broadcast online.
Lenders sees a need for both score providers for now
VS4 has become more competitive in the GSEs' market since their oversight agency unified the pricing for loans based on it with FICO's longtime industry standard, removing a previous adjustment, but so far lenders are still reporting a need for both credit metrics.
"Since VantageScore 4.0 isn't accepted across all programs yet, this approach gives loan officers more flexibility," CCM said in its emailed statement.
Executives from Fairway, Rate and Movement all also issued statements that show a persistent need for FICO scores in a press release.
"We will continue to evaluate FICO Scores in our wide range of eligible loan products and programs," Stacey Sprain, senior vice president of credit and vendor support at Fairway Home Mortgage, said in one such statement.
VantageScore 4.0 and a newer FICO 10T score slated for later enterprise adoption both differ from the latter's traditional credit metric for mortgages in that they both incorporate more data such as borrower payments over time as opposed to a snapshot of the borrower's obligations.
While CrossCountry has reported some early savings related to current GSE loan pricing with no differentiation for FICO classic and VS4 scores, former Federal Housing Finance Agency Director Sandra Thompson said this week she had some concerns about it.
Ex-officials' take on current loan pricing for scores
"The most important aspect of credit modernization is getting the risk pricing of the loans done correctly," Thompson said. "A 740 classic FICO isn't necessarily the same risk as a 740 VantageScore loan," she said during the Housing Finance Strategies conference.
Scores the GSEs use in loan pricing have broad impacts for them and their counterparties that Thompson said should be given more consideration before treating them in a unified manner.
"Capital is absolutely going to be impacted. The mortgage insurers are looking at these numbers as well," Thompson said.
Both she and her fellow HFS conference panelist Alanna McCargo, who previously served as president of Ginnie Mae and then later of the Federal Home Loan Bank of San Francisco, called for more data around such implications.
"I just think we need to be very careful as this rolls out," McCargo said.
