Overview
- The Federal Housing Finance Agency directed Fannie Mae and Freddie Mac to use one mortgage-pricing grid that treats Classic FICO and VantageScore 4.0 equally, a change announced Tuesday that ends FICO’s decades-long de facto exclusivity in GSE-backed underwriting.
- Rocket Mortgage said it will make VantageScore 4.0 its preferred score for eligible loans starting in the fourth quarter, marking the first big-lender move to favor the rival model and increasing the chance other lenders follow.
- Investors reacted sharply, sending FICO shares down about 20% in premarket trading and prompting a BofA Securities downgrade that cited heightened regulatory risk and a sharply reduced price target.
- TransUnion locked in $0.99 mortgage pricing for VantageScore through December 2028, giving lenders a low, predictable option that intensifies price competition for credit-score pulls.
- VantageScore 4.0 uses extra data such as rent and utility payments that can help thin-file borrowers, but lenders and securitization systems must rework underwriting and modeling so any broad shift in market share will unfold over months while FICO’s new product plans remain subject to regulator approval.