New credit scores models raise questions on LLPAs and liquidity

"Turner emphasized that America was built on competition, stating that the decision to accept new credit score models would allow more data to be considered, including borrower utility data and rental history that were previously not included."

"Pulte announced a pilot program for Fannie Mae and Freddie Mac to operationally test the acquisition of loans underwritten with VantageScore 4.0, indicating that up to 21 of the nation's largest lenders could participate."

"Freddie Mac has already purchased $10 million in loans tied to VantageScore 4.0, while Fannie Mae has not yet acquired any of these loans, and no securitizations to date have included loans using VantageScore 4.0."

"Turner and Pulte stated that the changes are advantageous, especially for first-time homebuyers, as they ensure the most robust and up-to-date models are being used, leading to transparency and market stability."

Federal housing leaders announced new credit score models, FICO Score 10T and VantageScore 4.0, to reduce mortgage costs for borrowers. The U.S. Department of Housing and Urban Development will accept these models, which include utility data and rental history. This rollout allows for competition between the models for FHA loans, ensuring the use of updated models for market stability. A pilot program for Fannie Mae and Freddie Mac will test VantageScore 4.0, with Freddie Mac already purchasing loans tied to it. Separate pricing adjustments will be implemented for accurate risk assessment.

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