Key facts
- VantageScore 4.0 is now available to all Fannie Mae and Freddie Mac-approved single-family lenders.
- Lenders can choose between Classic FICO and VantageScore 4.0 for conventional loans.
- FICO Score 10T is not yet eligible for delivery to the GSEs.
- FHFA Director Bill Pulte is seeking competitive pricing from FICO for its FICO 10T product.
- Manually underwritten loans must continue to use Classic FICO.
- Fannie Mae and Freddie Mac have updated pricing and fee structures to accommodate VantageScore 4.0.
The Federal Housing Finance Agency (FHFA) has made VantageScore 4.0 available to all single-family lenders approved by Fannie Mae and Freddie Mac, allowing them to choose between this model and the traditional Classic FICO score for conventional loans. FHFA Director Bill Pulte announced the expansion via social media, noting that FICO Score 10T is not yet eligible for delivery to the government-sponsored enterprises (GSEs).
Pulte expressed frustration with FICO's pricing for its FICO 10T product, stating on social media that the company appears uninterested in offering competitive costs. He is reportedly in discussions with FICO to encourage more competitive pricing.
Effective immediately, lenders can use either Classic FICO or VantageScore 4.0, but must apply the chosen model consistently to all borrowers on a single loan. Manually underwritten loans still require the use of Classic FICO. Fannie Mae has updated its loan-level price adjustment (LLPA) matrix, and Freddie Mac has updated its credit fee exhibits to reflect the inclusion of VantageScore 4.0.
Discussions are also underway with credit bureaus Experian, Equifax, and TransUnion regarding alternatives to the tri-merge credit reporting model, with a focus on lowering costs and potentially using single-merge or bi-merge reports. Pulte criticized credit bureaus and scoring companies for prioritizing pricing over innovation and competition.
An analysis by Keefe, Bruyette & Woods indicated that VantageScore 4.0 loan volume, while still low, rose to 5.6% in August, with Rocket Mortgage and United Wholesale Mortgage accounting for nearly all of this volume. These lenders have increased their adoption of VantageScore 4.0, though overall industry penetration remains limited as most other lenders are still primarily using FICO scores.
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