Key facts
- Mat Ishbia, CEO of United Wholesale Mortgage, believes VantageScore 4.0 will help more borrowers qualify for mortgages.
- VantageScore 4.0 is now available for conventional loans through Fannie Mae and Freddie Mac.
- UWM reported that 25% of its borrowers currently see a better credit result with VantageScore 4.0 versus Classic FICO.
- A broker used a borrower's VantageScore of 775 (adjusted to 755) to improve loan pricing and reduce mortgage insurance costs.
- An analysis by Pivot Financial suggests VantageScore 4.0 may increase loan costs for borrowers.
- UWM's Underwriting+ program has shown faster closings and higher closing percentages in pilot testing.
Mat Ishbia, president and CEO of United Wholesale Mortgage (UWM), expressed strong support for VantageScore 4.0, believing it will enable more borrowers to qualify for mortgages and potentially improve loan pricing. His remarks were made at the Association of Independent Mortgage Experts (AIME) Fuse event in Austin.
The Federal Housing Finance Agency (FHFA) recently announced that VantageScore 4.0 is now available for approved single-family lenders to use for conventional loans through Fannie Mae and Freddie Mac. Lenders can choose between VantageScore 4.0 and Classic FICO, though FICO Score 10T is not yet eligible. The Federal Housing Administration is also expected to offer both VS4.0 and FICO 10T for FHA loans in January.
UWM has reported that approximately 25% of its borrowers currently receive a more favorable credit outcome when using VantageScore 4.0 compared to Classic FICO, a figure they anticipate could rise to 40% by the end of September. Ishbia shared an anecdote where a borrower's VantageScore of 775 (adjusted to 755) led to improved loan pricing and reduced mortgage insurance costs.
However, not all industry participants share this optimism. An analysis by Pivot Financial suggests that while VantageScore 4.0 might lower credit score costs for lenders, it could make loans more expensive for borrowers over time, citing differences in how the models assess scores. Jennifer McGuinness-Lubbert, CEO of Pivot Financial, noted that the GSEs are still evaluating the performance of VantageScore 4.0.
Ishbia also discussed UWM's new Underwriting+ program, designed to streamline the loan processing by giving underwriters more control and reducing handoffs. He described the pilot program's results as "off the charts," citing faster closings, higher closing percentages, and fewer interactions for consumers and underwriters.