FICO CEO William Lansing argued that, by allowing lenders to pick between Classic FICO and VantageScore 4.0, FHFA may be creating a race to the bottom when it comes to the quality of credit scores.
The Mortgage Bankers Association and other groups supported the wide-ranging bill which is aimed at housing affordability. MBA, though, raised some concerns about appraisal reforms included in the package.
New credit score data, such as rent payment history and bank account cash flows, may benefit some mortgage borrowers, but the new elements could also cause some problems.
The Federal Reserve and Treasury Department are on a path to reducing capital requirements for banks, large and small. The motivation includes the shift seen in mortgage lending toward nonbanks following the 2008 crisis.
While FHFA Director Bill Pulte had announced that the GSEs would “immediately” begin accepting VantageScore 4.0, FHFA acknowledged this week that implementation will take some time.
A new bill seeks to require FHFA to create a public database of information on all mortgage appraisals. The proposal comes as the Trump administration disbanded the Biden-era task force created to address appraisal bias.
The proposal seeks to reinstate the Community Reinvestment Act framework that existed prior to the 2023 final rule. That framework has largely been unchanged since it took effect in 1995.
FHFA said lenders can now use VantageScore 4.0 when underwriting GSE loans. It’s not clear, though, if the mortgage industry is ready to take advantage of the opportunity.
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