Weekly Real Estate News
Summary
Pennymac has completed VantageScore 4.0 deployment across consumer direct, broker direct and correspondent lending, expanding operational access to the newer credit-score model across a major mortgage platform.
Pennymac has completed deployment of VantageScore 4.0 across its consumer direct, broker direct and correspondent mortgage businesses, putting another major mortgage platform into production with the newer credit-scoring model.
PennyMac Financial Services announced the rollout Monday, saying the model is now available to borrowers who come to the company directly, borrowers working with independent mortgage brokers and lenders that sell loans through Pennymac’s correspondent operation.
The correspondent channel gives the move broader reach than a single retail-lender implementation. Pennymac said its correspondent business serves hundreds of community lenders, credit unions and regional banks. The company described itself as the market’s largest correspondent aggregator and said it expects adoption through that channel to help pull wider industry use forward.
“We intend to be at the vanguard of credit score modernization,” Chairman and CEO David Spector said in the company’s announcement.
The deployment follows a rapid expansion of VantageScore 4.0 availability in the government-sponsored enterprise market. The Federal Housing Finance Agency said Sept. 9 that all Fannie Mae- and Freddie Mac-approved lenders could use VantageScore 4.0 for eligible loans, removing a prior requirement for written approval. Classic FICO remains eligible, while FICO 10T is not yet eligible for delivery to the enterprises.
Pennymac’s correspondent operation moved just ahead of Monday’s companywide announcement. In an Oct. 2 correspondent bulletin, Pennymac said VantageScore 4.0 became eligible that day for conventional GSE transactions meeting applicable program loan-to-value ratios and guidelines, all eligible occupancy types, and qualifying Desktop Underwriter and Loan Product Advisor submissions.
That bulletin also contains an important operational limitation. Pennymac said loans using VantageScore 4.0 must still include a tri-merge credit report containing both Classic FICO and VantageScore 4.0 scores for all borrowers. The same score model must be used for all borrowers for underwriting and pricing.
Those requirements are consistent with FHFA’s interim implementation approach. The agency says lenders may choose between Classic FICO and VantageScore 4.0 on a loan-by-loan basis, but must use the same model for every borrower on a given loan. FHFA has also said the introduction of VantageScore 4.0 does not initially change the enterprises’ existing credit-reporting requirements.
Another major lender moves from testing to production
Pennymac’s rollout adds to a series of implementation moves by large mortgage lenders. WRE News reported Sept. 28 that Rocket Mortgage planned to make VantageScore 4.0 its preferred model for eligible direct-to-consumer mortgages during the fourth quarter after testing 1.4 million credit reports using VantageScore and FICO.
The federal framework has also been moving quickly. WRE News reported in April on the government’s broader push to introduce competing mortgage credit-score models. FHFA’s September expansion to all approved GSE lenders removed a significant access barrier and gave lenders more room to decide where VantageScore fits their production systems.
For brokers and correspondent lenders, Pennymac’s announcement matters because the decision is no longer confined to a direct-to-consumer channel. A broker can now encounter the model through Pennymac’s wholesale operation, while smaller institutions selling loans to Pennymac have a major correspondent outlet accepting eligible VantageScore 4.0 production.
Whether that availability translates into rapid adoption will depend on lender economics, investor execution, technology readiness and borrower-level outcomes. Pennymac argues that competition among scoring models should improve predictive accuracy, expand coverage and reduce costs. Those are company claims, and the actual borrower impact will depend on how lenders use the competing models and how pricing develops.
What is clear is that mortgage credit-score modernization has moved beyond federal approval and limited testing. With Pennymac now live across three production channels, the operational phase is reaching a much larger portion of the mortgage market.
