The Federal Housing Finance Agency today announced the approval of the FICO 10T and VantageScore 4.0 credit score models for use by Fannie Mae and Freddie Mac. The agency also announced that the GSEs will need two, rather than three, credit history in the national consumer reporting agencies.
FHFA expects implementation to be a multiyear effort, but once in place, lenders is going to be necessary to deliver both FICO 10T and VantageScore 4.0 credit ratings with every loan sold to the GSEs. Fannie Mae and Freddie Mac have relied on classic People's credit reports for pretty much Two decades. Implementation from the new FICO and VantageScore models will improve accuracy by capturing new payment histories for borrowers when available, for example rent, utilities and telecom payments, the company said. ABA has commented extensively to FHFA regarding credit ratings. ABA supports the growth of credit score models to safely and reliably expand credit access, but has raised concerns that any new requirements do not impose additional costs for lenders or borrowers and do not subject lenders to new liability for that use of any approved credit score model.
FHFA also announced Fannie Mae and Freddie Mac are changing guaranteed fee pricing by eliminating upfront fees for certain borrowers and affordable mortgage products while implementing increases to upfront fees for most cash-out refinance loans. Upfront fees are eliminated for first-time homebuyers at or below 100 percent of area median income in most of the us and below 120% of AMI in high-cost areas; HomeReady and residential Possible; HFA Advantage and HFA Preferred loans; and single-family loans supporting the job to Serve program. The starting date for that fee eliminations will be announced later on.
The implementation of recent fees for cash-out refinance loans will begin Feb. 1, 2023, to minimize market and pipeline disruption, FHFA said. The pricing changes will build upon the upfront fee increases for second-home loans and high-balance loans announced in May.
