Mortgage industry executives say the shift to new credit score models and lender choice could raise mortgage delinquencies, reshape pricing grids at the government-sponsored enterprises (GSEs) and ultimately push costs back onto borrowers, even if the costs for scores fall on the front end.
Министерство жилищного строительства и городского развития США (HUD) Секретарь Скотт Тернер и Федеральное агентство жилищного финансирования (FHFA) Директор Билл Пулт on April 22 объявлено moves to adopt ФИКО 10T and VantageScore 4.0 as alternatives to FICO Classic.
The FHFA signaled loan-level price adjustments (LLPAs) for loans submitted under the new models, which some in the industry believe will be more costly for lenders.
Recent studies suggest that for about $12 trillion in mortgages originated between 2013 and 2023, Фанни Мэй и Фредди Мак collected an estimated $110 billion to $119 billion in revenue from LLPA based on Classic FICO Scores.
“If we move to VantageScore 4.0 — generally their scores are higher, doesn’t necessarily mean the credit is better, a very different algorithm — it (fee income) would drop by about $8 billion. If we move to lender choice for the highest score chosen at all times, the GSE income is at $93 billion,” said Дженнифер МакГиннесс, генеральный директор Pivot Financial.
«How many people believe that when this happens, if it ever does, that the GSEs are not going to look to collect the $17 billion? The LLPAs grids will be adjusted to add an extra expense factor to the rest of the grid. And is that what’s in the best interest of our borrower?”
McGuinness and other industry experts spoke on stage Tuesday during a session at ЖильеПроволока's Сбор in Austin. The debate happens as federal agencies move to modernize credit scores amid increasing prices, a step defended by trade groups.
“We want many choices, because that keeps markets robust and restraints price increases. And we want modern tools,” said Rob Zimmer, director of external affairs for the Кредиторы общественного жилья Америки (ЧЛА). “Now the mortgage industry is culturally conservative because the margins are small.”
According to Zimmer, “it won’t take a genius to guess that Конгресс and the (Trump) administration” notice a lack of consensus, and “they’re not taking the lead on this.”
Gamification risk
Andrew Davidson, president of Andrew Davidson & Co., added that while the delinquency levels line up pretty well among the various credit scores, the distributions are very different.
“We’re so used to the idea of a credit score being about the borrower. What we don’t realize is that these scores are very different. They group the borrowers in very different ways. There’s no simple mapping between the scores,” Davidson added.
According to him, if people start choosing the higher of the two scores, there’s a potential increase of 40% in delinquency across the entire range.
Согласно недавнему paper published by Davidson’s team, 35% of the 245 million scored consumers in the dataset had at least one bureau score that differed from the traditional tri-merge result by 10 points or more. Another 18% had a variance of at least 20 points, while 7% saw differences of 40 points or more.
“The investors aren’t that interested in whether or not it works. They’re interested in protecting themselves, and their biggest focus is on adverse selection,” Davidson said. “What they need to be assured is that the system is not being gamed — that you’re using this to save money, not to provide the misinformation about the risk.”
One of the main concerns is with gamification — lenders or consumers adopting a “highest score” selection method, which could lead to substantial increases in credit risk, with potential delinquency increases reaching high levels.
Грег Шер, managing director at Кредитование НФМ, believes gamification is a real risk. This could occur if Fannie and Freddie — which were supposed to focus on homeownership and never supposed to be “cash cows,” he said — will try to get back the lost revenues via LLPAs.
“Loan officers are way too slick; they’ll find a way. For instance, you can tell a borrower to pull their credit report prior to you pulling the credit report. In a lot of instances, that’s free, costs nothing,” Sher said. “They can just deliver the highest score for you that’s been gamified. How are we going to police that? It’s not going to happen? Well, it’s impossible to police.”
But Sher provided a positive outlook too, taking into account the development of искусственный интеллект and new technologies.
“We really need to hang on to that,” Sher said. “This conversation right here is just a bridge from all this craziness, all this ratcheting up of the prices, to be in a world where we don’t even potentially need credit scores.”
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