Mortgage industry welcomes new credit score models, urges further reform

The majority of mortgage industry trade groups and professionals reacted in a supportive but pragmatic way following an announcement from federal housing agencies that detailed moves to modernize mortgage underwriting by introducing newer credit scoring models. They largely welcomed the shift while emphasizing that the real test will be in execution and follow-through.

The announcement in question occurred during a joint press conference on Wednesday hosted by the U.S. Department of Housing and Urban Development (HUD) and the Federal Housing Finance Agency (FHFA).

HUD announced plans to allow FICO 10T and VantageScore 4.0 for Federal Housing Administration (FHA) loans, while the FHFA is launching a pilot for VantageScore 4.0 at Fannie Mae and Freddie Mac, with FICO 10T to follow.

HUD Secretary Scott Turner said that the FHA plans to adopt both models in the coming months, but he did not provide a timeline. He said the changes are intended to expand access to credit while maintaining underwriting rigor.

FHFA Director Bill Pulte added that the agency plans to introduce a new pricing grid tailored to the updated models and is in discussions with Fair Isaac Corp. and VantageScore about reducing credit score costs, potentially to as low as 99 cents per score.

Pulte said the newer models could better account for borrower behavior such as on-time rent payments, which are not always captured in traditional scoring systems.

Industry professionals largely framed the decision as a positive development.

Isaac Boltansky, head of public policy at Pennymac, said the move introduces “much-needed competition into a critical segment of the mortgage process,” adding that a more competitive landscape could lead to a “more transparent and cost-effective mortgage experience” for consumers.

The Mortgage Bankers Association (MBA) echoed that view and lauded the announcement, with CEO Bob Broeksmit calling the announcement “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 said in his statement.

At the same time, Broeksmit emphasized that implementation will require coordination across lenders, investors and regulators, and said the MBA is seeking additional guidance to ensure a smooth rollout. The group also reiterated its push for further reforms, including changes to the tri-merge credit reporting requirement.

The Community Home Lenders of America (CHLA) also praised the move but stressed that it should be seen as a first step rather than a complete solution.

“This is a very good first step,” said Scott Olson, CHLA’s executive director, while urging policymakers to pursue longer-term changes to increase competition — inclduing the potential for Fannie Mae and Freddie Mac to develop their own credit scoring capabilities.

The group has been vocal in criticizing the dominance of FICO in the mortgage market, citing sharp price increases in recent years, and has called for faster adoption of alternative scoring models.

Not all reactions were enthusiastic. Some observers downplayed the immediate impact, noting that the rollout will begin as a limited pilot program.

Jennifer McGuinness, CEO of Pivot Financial, told HousingWire that the announcement “is really nothing new,” pointing to indications that only a small group of lenders will initially participate and that many operational details remain unclear.

“Fannie and Freddie are going to proceed with a pilot of up to 21 lenders. Director Pulte indicated the lenders ‘do not know’ they have been selected, and the Fannie and Freddie press releases have links for lenders to inquire if they are ‘interested.'”

“The two more material points from today were his confirmation that there would be a separate grid for Vantage released in the future and that the FICO 10T data will be released by [the] summer,” she added.