UWM brokers report use of VantageScore 4.0 improved loan terms

Several mortgage brokers using VantageScore 4.0 through United Wholesale Mortgage (UWM) reported positive reviews, citing credit score improvements and previously “impossible” loan scenarios that became possible with access to the credit model.

UWM announced at the end of April that it was giving its independent mortgage brokers access to both FICO and VantageScore credit scoring models for conventional loans, a move that also allows brokers to automatically receive both credit scoring models due to UWM’s no-cost credit reports.

UWM’s announcement came just a week after the Federal Housing Finance Agency  (FHFA) announced a pilot program to allow the use of VantageScore 4.0 for loans sold to Fannie Mae and Freddie Mac. The agency also shared its plans to introduce FICO 10T and a new pricing grid tied to the updated credit models.

Speaking with HousingWire at UWM Live! — the company’s annual event at its campus in Pontiac, Michigan — Chris Sbonek, president and CEO of Mitten Mortgage Lending, said that he was able to lower a borrower’s rate from 6.5% to 6.375% after applying UWM’s parameters of subtracting 20 points from VantageScore.

The deal was Sbonek’s first using VantageScore.

“UWM pays for our credit score pulls, so there hasn’t been a noticeable difference in price, but since they pay for Vantage, I’m telling my staff that they might as well pull Vantage too,” Sbonek said.

Sbonek added that he was actually able to offer the borrower two options: take advantage of the lower rate or stay with the 6.5% rate and receive a $2,700 lender credit.

Ashley Bedford, a senior loan officer at Appli Home Loans, said that her first time using the VantageScore model was “easy and seamless.” It allowed a veteran client to improve their FICO score from 564 to 589, turning a dead deal into an approved loan through the U.S. Department of Veterans Affairs (VA).

“It simply went from no loan to a loan,” Bedford said. “We went from telling the borrower that we can’t do this right now and we’ve got to fix these things to, actually, we’re going to get you into this. And previously, that wouldn’t have been able to be done with any of the other models.

“You’d have to work on your FICO score and, otherwise, you’d have to do a manual underwrite, which is just a little bit more legwork for the client.” 

Joey Rivero from Clear Choice Lending shared several success stories within weeks of using the model. 

The broker-owner recounted a borrower who went from “no loan” to clear-to-close in roughly 10 days after the lender pulled a VantageScore-based report through UWM. The borrower’s score under the traditional model was in the high 500s, leaving him ineligible for the cash-out refinance he needed. 

After UWM rolled out the VantageScore option, Rivero repulled credit and saw the middle score jump to the high 600s, enough to qualify. The $600,000 cash-out refi deal was ultimately priced at a 6.499% rate, a scenario that was not available before the change.

In another case, a borrower who came in reporting a 701 credit score saw that number climb to the mid-760s after Rivero ran the report through VantageScore. That change translated into about $33 a month in mortgage insurance savings and roughly $40 a month in interest savings, Rivero said, thanks to a rate that was about an eighth of a point lower.

“Now I can get the customer a better interest rate, better terms, better mortgage insurance terms,” he said. “The rate was more competitive than the bank could offer him.”

Rivero said Clear Choice currently has four loans in the pipeline that have benefited from VantageScore, with each seeing a boost of roughly 60 points or more. One was the completed cash-out refi; the other three are purchase loans or near-closing refinances.

“The lowest boost that we’ve seen is 61 points,” he said. “It’s made a major impact.”