Lawmakers voice support for FHFA’s adoption of VantageScore 4.0

Nearly two dozen members of Congress recently sent a letter to Bill Pulte, director of the Federal Housing Finance Agency (FHFA), that supports his decision to accept VantageScore 4.0 credit scores for mortgages purchased by Fannie Mae and Freddie Mac.

The lawmakers, led by Rep. Mike Flood (R-Neb.), said that the move will help President Donald Trump in his “mandate to lower the cost of housing” through final implementation of the Credit Score Competition Act.

“American consumers have been stuck using a single outdated credit scoring model,” the letter to Pulte reads. “Thanks to your efforts, the credit score models on which our housing market relies will be better able to capture creditworthy individuals, like those in rural areas and our veterans, without lowering underwriting standards.

“Under the Biden Administration, the cost of owning a home skyrocketed. Under your
leadership, the FHFA has been chipping away at those costs and putting homeownership back within reach for millions of additional Americans.”

In a statement published Friday, VantageScore also lauded the FHFA’s decision made earlier this month, which quickly faced many questions across the mortgage industry. The company noted that VantageScore 4.0 had previously been approved for use in mortgages from the U.S. Department of Veterans Affairs and several of the Federal Home Loan Banks.

“Accepting VantageScore 4.0 for mortgages finally corrects the legacy of inefficiency, waste and stagnation that outdated credit scoring models have perpetuated,” said Tony Hutchinson, the company’s executive vice president and head of public affairs.

To the surprise of many mortgage professionals, Pulte announced on July 8 that Fannie and Freddie would immediately begin accepting the new scoring model. A week later, he issued an FAQ via social media that attempted to explain some of the nuances of the move.

Among other details, the FHFA said the inclusion of VantageScore 4.0 would not change existing requirements for lenders to provide a tri-merge credit report, nor does the agency expect to pursue other changes to its credit score or credit reporting rules.

Widespread industry use of the new model is not expected to happen anytime soon as there are barriers to adoption. Importantly, Fannie and Freddie must update their selling guides before being allowed to purchase loans with VS 4.0 scores.

Michael Metz, the operations manager at Arizona-based lender V.I.P. Mortgage, previously told HousingWire that it’s “pretty easy” to obtain either VS 4.0 or the legacy FICO Classic from Experian, Equifax or TransUnion. But the industry isn’t ready to fully integrate them into the agency mortgage process.

“The tech side is one big hurdle that needs to be handled everywhere, from pricing engines to the LOS integrations; that’s all going to have to end up getting retooled,” Metz said. “Most of them are not designed for the different methods; they are all set up for FICO.”