A Phil Hall Op-Ed: Federal Housing Finance Agency (FHFA) Director Bill Pulte took a break yesterday from his endless and emetic harassment of Federal Reserve Chairman Jerome Powell to make an announcement framed in the manner one associates with news of life-saving medical advancements.
“Effective today, to increase competition to the Credit Score Ecosystem and consistent with President Trump’s landslide mandate to lower costs, Fannie and Freddie will ALLOW lenders to use Vantage 4.0 Score with no current requirement to build new infrastructure (stays Tri Merge),” Pulte wrote on X, adding, “We are expanding credit access to millions of forgotten Americans — people who live in rural areas, renters who pay their rent on time every month — and bringing down closing costs.”
Pulte also offered this post-script: “My ORDER today (thanks to my boss, POTUS) will allow for Americans to use their RENT to qualify for a mortgage. Credit history will no longer just include credit cards and loans. This is HUGE.”
Pulte’s trumpeting of the use of Vantage 4.0 Score is amusing when one considers the FHFA announced in October 2022 that it validated and approved the use of both the VantageScore 4.0 credit score model and the FICO 10T credit score model by Fannie Mae and Freddie Mac. At the time, the FHFA sought to replace the traditional FICO credit score model with a dual structure featuring the VantageScore 4.0 and the FICO 10T credit score models. This would have simplified credit scoring by transitioning from the traditional method of requiring three credit reports for single-family loans to two reports.
That rollout was supposed to be a multiyear endeavor, with the goal of going live in the fourth quarter of 2024. To borrow a Pulte line, it would have been “HUGE.” But it didn’t happen – the banking industry balked at the FHFA’s plans and created roadblocks to the rollout, such as making demands for an expanded stakeholder feedback period. As a result, the agency indefinitely delayed its plans for enacting the initiative before the Trump administration took office.
Pulte, however, did not seek stakeholder feedback in making his unilateral announcement. And it is solely his announcement, only made on his personal X account – as of this morning, there is no statement on the FHFA website affirming this dramatic change in the agency’s policy.
Even worse, Pulte – who has been openly critical of FICO since taking on the FHFA role – seems be shifting the playing field to the advantage of VantageScore 4.0. As he writes on X: “We will be incentivizing lenders, who USE both Vantage 4.0 and FICO, with better pricing – anything to help the consumer. If you use Vantage and not just FICO, for the betterment of the American people and the consumer, you should get better pricing. It’s just math. Predictive math.”
Sorry, but the math doesn’t add up when you consider one itty-bitty fact that Pulte forgot. The Wall Street Journal highlighted a research note by Jaret Seiberg, an analyst at TD Cowen, who observed that mortgage lenders have much less experience with VantageScore versus FICO and may prefer to keep using FICO despite discount incentives to try the competition. Seiberg added that Pulte’s decision to jettison the previously planned dual structure policy could benefit FICO if lenders are not forced to also use VantageScore.
“Pulte may end up safeguarding FICO’s dominant position,” Seiberg wrote.
Of course, Pulte’s great announcement is meaningless in a housing environment where affordable homeownership opportunities remain an elusive commodity and home prices continue to accelerate despite a slowdown in sales. Perhaps in his next series of X posts Pulte will call out his buddies in the private equity and hedge fund sectors who skewered the housing market by buying up affordable properties and effectively shutting out too many of the first-time buyers he claims to support? Or is that asking too much of him?
Phil Hall is editor of Weekly Real Estate News. He can be reached at [email protected].
Photo courtesy of Fans of Bill Pulte’s Instagram page
Mr. Pulte; Trump did not win in a landslide.