FHFA clarifies key VantageScore 4.0 implementation questions

Mortgage industry professionals had more questions than answers following last week’s bombshell announcement that the government-sponsored enterprises Fannie Mae and Freddie Mac have approved the use of VantageScore 4.0, a new credit scoring model.

A week after the initial announcement, Federal Housing Finance Agency (FHFA) Director Bill Pulte answered several key questions.

In an FAQ letter posted Tuesday on social media platform X, Pulte said that lenders will soon choose between FICO Classic and VantageScore 4.0. Industry professionals previously told HousingWire they were unclear if both scoring models were to be used, or if lenders had to choose between the two.

The FHFA also answered the following questions:

Will lenders be able to report credit scores from multiple models across different loans? Yes. To promote robust competition and provide further flexibility for consumers and lenders, the enterprises will allow lenders to determine which credit score model to use on each loan they deliver.

Will this result in changes to credit reporting requirements? The inclusion of VantageScore 4.0 will not change existing requirements for needing a tri-merge report.

When will these changes take effect? The FHFA said that the GSEs are completing the final steps for the delivery of loans scored with VantageScore 4.0. “The Enterprises will keep sellers/servicers and other market participants apprised of next steps. Each Enterprise will then update its Selling Guide policies; until then, existing Selling Guide and other requirements remain in place,” the letter explained.

Will FHFA pursue further changes to the enterprises’ credit score or credit reporting requirements? “Not initially. The inclusion of VantageScore 4.0 credit scores will not change the Enterprises’ current credit reporting requirements (e.g. tri-merge/bi-merge credit reporting). By keeping these requirements as they exist today to the greatest extent possible, FHFA is seeking to minimize the cost and complexity of this transition,” according to the letter.

Why is FHFA pursuing these changes? VantageScore 4.0’s implementation process has arrived at a point where the enterprises soon can move forward with adoption of scores from the model. Similar implementation efforts are underway with respect to FICO 10T, and the enterprises expect to be able to publish historic FICO 10T data and adopt scores from the model at a later date.

Fannie Mae, Freddie Mac and the FHFA did not respond to HousingWire’s requests for comment.