Competition is brewing between FICO and VantageScore Solutions as lawmakers continue to push the Credit Score Competition Act. The bill enables Fannie Mae and Freddie Mac to consider alternative credit scoring models when making mortgage-purchase decisions, something the GSEs are currently exploring. VantageScore recently updated its score range to match FICO. Nevertheless, FICO argues that a VantageScore of 700 is not comparable to a 700 FICO score. The VantageScore model previously ranged from 501 to 990, but now with VantageScore 3.0, released late last year, the score is in the more commonly used 300 to 850 range. “The fact that these scores are now on the same range, however, does not mean that these scores are...

Fannie Mae recently made changes to its appraisal process and financial eligibility requirements for seller/servicers. In order to be able to use its discretion to enforce breaches of financial eligibility requirements that apply to seller/servicers, the GSE said it had to change certain polices. This allows Fannie, when warranted, to determine whether a breach of the lender contract should be called. “The changes include how lenders can comply with our requirements for maintaining minimum acceptable levels on capital,” said Jude Landis, Fannie’s vice president of credit policy. Prior to the change, explicit criteria in its selling guide limited Fannie’s ability to apply enforcement discretion.

Fairholme Capital Management, in a new letter to clients, once again lays out its argument for investing in Fannie Mae and Freddie Mac stock, but also takes a subtle, but polite, swipe at those opposed to a “recap-and-release” plan for the GSEs. “Only the disingenuous would assert that recapitalization of these companies would take decades and come at taxpayers’ expense, as if retaining earnings precluded the ability of each company to raise equity from private investors,” the mutual fund manager writes. Fairholme also notes that it owns GSE junior preferred shares – as opposed to common – because “…the provisions of the preferred stock contracts that...

Uneconomic price competition coupled with Congressional discord are some of the concerns analysts have expressed about the Mortgage Bankers Association’s newly released plan for GSE reform. The MBA’s proposal recommends multiple privately owned guarantors, preferably more than two, to increase competition in the market. Fannie Mae and Freddie Mac would be the first two and the MBA suggests that new guarantors receive a charter to enhance competition. “The more market participants that compete, the better for consumers, the economy and the system,” said Rodrigo Lopez, MBA chairman. GSE Reform Principles and Guardrails also suggests that Congress sanction an “explicit government guarantee for eligible securities in order to entice domestic and foreign investors to keep buying...

Treasury secretary nominee Steve Mnuchin still has GSE reform high on his list, according to one of President Trump’s top economic advisors. Meanwhile, speculation abounds as to whether there’s an administrative solution to GSE reform absent any legislative action. After some back and forth on the topic since the announcement of Mnuchin’s nomination his subsequent comments on the GSEs, economic advisor Gary Cohen said in national media outlets late last week that GSE reform is definitely a priority for Mnuchin. In fact, he said that it’s something Mnuchin’s spent a lot of time working on. “Once he gets approved and confirmed, Steve will be taking that on as one of this early priorities. So we definitely have some plans...

One month does not a trend make, but early indicators hint that mortgage lenders may be stretching the credit box to boost volume. Fannie Mae and Freddie Mac issued $91.71 billion of single-family mortgage-backed securities in January, a stiff 18.3 percent drop from the previous month. Some of the decline was the result of Fannie’s heavy volume in December, when its business flow was catching up from an unusually slow November. But mortgage interest rates have edged up, and there is widespread expectation in the industry that refinance volume in 2017 will drop sharply from last year. Higher rates could also tarnish a housing market that’s bumping up against affordability and supply issues.

Industry technology vendor DocuSign has tapped into some of the technological capabilities of Google – the G Suite collection of electronic tools, in particular – as part of a strategic initiative to digitize the mortgage closing process and sharply reduce the time it takes to close on a loan. “The broader idea for DocuSign – and Google Suite plays into this as well as the things that we’re doing with our ‘lead to close’ strategy – is wanting to take away any of the friction from completing ...

Walter Investment Management Corp. has yet to release fourth-quarter results, but if its nine-month performance is any indication, it has some major challenges ahead. Through September, the publicly traded nonbank – the nation’s eighth-largest servicer via its Ditech unit – lost $506.9 million, some of it tied to non-cash writedowns on its mortgage servicing rights. But if revenues are any indication of future earnings, investors shouldn’t brace for too much good news in its ...

Staying on top of the multitude of documents involved in the process of originating a mortgage can help lenders avoid regulatory issues and increase returns, according to an analysis by Nationwide Title Clearing. The mortgage research and document-processing service provider detailed a number of issues with the so-called trailing-document process in a recent update to a white paper initially published in 2014. NTC said the white paper on document tracking and organization ...

Mortgage lenders that deliver loans to Fannie Mae and Freddie Mac mortgage-backed securities continued to do gradually more business with borrowers with lower credit scores, according to an exclusive new Inside Mortgage Trends analysis of MBS data. In 2016, 21.4 percent of purchase mortgages securitized by the two government-sponsored enterprises had credit scores ranging from 620 to 699. That was up from 20.6 percent in 2015 and 20.5 percent ... [Includes two data charts]