Weekly Real Estate News
United Wholesale Mortgage says one in four borrowers in its current pipeline is seeing a more advantageous credit result when evaluated with VantageScore 4.0 instead of the traditional FICO model.
The Pontiac, Michigan-based lender said approximately 25% of borrowers are currently receiving a better relative credit result with VantageScore 4.0, a difference that can potentially improve loan pricing, loan-level price adjustments, mortgage insurance costs or eligibility. In some cases, UWM said the alternative score can turn a loan that otherwise might not qualify into an approval.
UWM expects that share to increase quickly. The company projects that as many as two in five borrowers could see a more advantageous result by the end of September.
Early results from mortgage credit-score changes
The figures provide an early lender-level look at how the mortgage industry’s move toward alternative credit scoring is affecting actual borrower files. UWM began offering mortgage brokers access to both FICO and VantageScore 4.0 for conventional loans earlier this year and has been among the largest early users of the newer model.
UWM said the results do not reflect a change in lending standards. Instead, VantageScore 4.0 incorporates additional information and trended credit data intended to provide a different assessment of how consumers manage credit over time.
“The addition of VS4 has been one of the best things that has come from FHFA in many, many years,” UWM President and CEO Mat Ishbia said in the company’s announcement.
UWM’s 25% figure is company-reported and should not be interpreted as an industry-wide result. The lender did not disclose in its announcement the number of borrower files underlying the percentage or provide a breakdown showing how many borrowers received improved pricing, mortgage insurance terms or eligibility.
VantageScore adoption expands
The results arrive as use of VantageScore 4.0 expands across the conventional mortgage market. Fannie Mae and Freddie Mac now allow approved single-family lenders to use VantageScore 4.0 on eligible loans, giving lenders another credit-scoring option alongside Classic FICO.
For mortgage brokers and borrowers, the practical impact can be significant. A different qualifying score can affect pricing, mortgage insurance, purchasing power and whether a borrower qualifies for a particular loan.
UWM said its early results suggest those differences are already showing up across a meaningful portion of its pipeline.
