The recent announcement that Fannie Mae and Freddie Mac will expand credit scoring options for mortgages is a promising first step in creating a scoring system to better serve creditworthy Americans, but there remain several questions about how it will be implemented, according to a joint statement released today by the American Bankers Association, the Mortgage Bankers Association and two other organizations.
Federal Housing Finance Agency Director Bill Pulte announced this week that he has directed the government-sponsored enterprises, or GSEs, to allow lenders the option to use VantageScore 4.0 while still allowing use of FICO to assess the creditworthiness of mortgages.
In their statement, the associations said the change could help achieve the shared goal “of a more efficient, more transparent and more competitive credit scoring system that serves as many creditworthy Americans as possible.” Still, they noted much work remains.
“The transition to a competitive market for credit scores raises a number of implementation questions and concerns that the GSEs will need to address before they can take delivery of loans that rely on new scores – including Vantage Score 4.0 and/or FICO 10T – for pricing or eligibility,” the associations said. “Credit score standards are embedded throughout the mortgage ecosystem and the incorporation of Vantage into that ecosystem will require the GSEs to provide lenders, investors and other market participants critical implementation guidance.
“Our organizations stand ready to partner with the GSEs to resolve these questions quickly,” they added. “Strong and fast collaboration between GSEs and industry stakeholders will be necessary to realize the vision of true competition for credit scores and lower costs for consumers. We look forward to working together.”
