The Department of Housing and Urban Development (HUD) and the Federal Housing Finance Agency (FHFA) have announced the first major update to their respective credit scoring models in decades.
HUD is now enabling the Federal Housing Administration (FHA) to use of VantageScore 4.0 and FICO 10T as eligible credit scoring models for FHA-insured mortgage underwriting. The FHFA gave the approval for Fannie Mae and Freddie Mac to move ahead with VantageScore 4.0 and FICO Score 10T, updating their selling guides with the new scores and immediately accepting Vantage-scored loans from approved lenders.
“By embracing additional predictive credit scoring models, we are taking a meaningful step toward expanding access to homeownership – particularly for creditworthy borrowers who may have been overlooked under older systems” said HUD Secretary Scott Turner.
FHFA Director Bill Pulte added, “We are modernizing credit scoring with more predictive models, helping millions of Americans who responsibly pay rent qualify for mortgages. That’s fair, it’s commonsense, and it’s finally delivering the benefits of competition to homebuyers nationwide.”
Mortgage Bankers Association President and CEO Bob Broeksmit welcomed the announcement, calling it “an important next step in modernizing the credit scoring framework.”
“Expanding the set of acceptable credit scoring models to include VantageScore 4.0 and FICO 10T will help foster a more transparent and dynamic market, broaden access to sustainable credit, and put downward pressure on costs for GSE and FHA borrowers,” Broeksmit declared. “Because both models have already been tested and validated, we look forward to a speedy expansion of the program to all lenders and for all loans, and to implementing FICO 10T to ensure the benefits of competition are extended market wide.”
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