FHFA Orders Fannie Mae and Freddie Mac to Allow VantageScore in Mortgage Lending
Bill Pulte, Director of the Federal Housing Finance Agency (FHFA), has directed Fannie Mae and Freddie Mac to allow all lenders to use VantageScore for mortgage credit scoring. This move ends Fair Isaac Corp.'s long-standing monopoly on credit scoring systems used by these government-sponsored enterprises. The decision follows a successful initial rollout involving 50 lenders using VantageScore, which Pulte described as 'incredibly successful'. Pulte also criticized FICO for increasing the cost of obtaining an individual's credit score by 1,800% since 2020. In response, FICO stated it supports fostering a competitive environment and highlighted its latest product, Score 10T, as more predictive due to trended data usage. The news caused pre-market trading losses for FICO stock, which fell by 2.14%. The shift in credit scoring policy is part of broader scrutiny into rising costs affecting the U.S. housing market.
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Topics: competition policy FHFA FICO mortgage lending VantageScore