To the Point With Bob: FHFA Director Pulte Is Leading the Charge on Credit Score Modernization at the GSEs

(To the Point with Bob is a periodic blog by MBA President & CEO Bob Broeksmit, CMB.
You can view this and past blogs here)

The second Trump Administration has been clear that it is committed to removing burdensome regulations, increasing supply, and finding ways to lower costs for consumers. 

And they are doing it fast. 

I was once again reminded of this a few weeks ago following Federal Housing Finance Agency (FHFA) Director Bill Pulte’s July 8 directive to Fannie Mae and Freddie Mac (the GSEs) to adopt a modernized credit score, VantageScore 4.0. Director William J. Pulte’s decisive leadership and bold action has accelerated what had previously been a multi-year process under FHFA’s Alternative Credit Score Initiative.

MBA, its members, and industry stakeholders for years have been calling for a more transparent and more competitive credit scoring and reporting regime, one that better reflects the financial health of today’s consumers, takes advantage of improvements in credit scoring and reporting, and expands access to homeownership for more creditworthy Americans.

In just a few short months, Director Pulte has lit a fire under the GSEs to get this done. Now it’s time for our industry to get to work with the GSEs to incorporate VantageScore 4.0 (and FICO 10T in the future) as soon as possible. 

Making this transition successful will require a collaborative approach, and FHFA and the GSEs have already hit the ground running with excellent industry engagement. We have been deeply involved in these meetings since the announcement, and within days were able to raise key questions and concerns from the industry to ensure they were addressed by FHFA and GSE staff. We are encouraged by this progress and are eager to move quickly to bring the benefits of new scoring models and increased credit score competition to borrowers.

Following these initial meetings, MBA has been leading industry discussions on developing business rules that will implement the change safely, quickly, and effectively.

The work should not stop there. If we’re introducing more competition in credit scores, it makes sense to do the same with credit reporting.

Voices are growing louder on the need to move away from the outdated government requirement of a tri-merge credit report. Requiring lenders to pull three credit reports to originate GSE or government loans simply does not make sense in today’s modern mortgage market.

I told you in a blog post earlier this summer that we are studying the feasibility of a requiring just a single credit report for GSE and government-guaranteed loans. The work on this has picked up significantly in recent weeks. Stay tuned for more updates.  

Director Pulte’s enthusiasm and actions provided the necessary direction, and MBA is leading the charge on these issues. We stand ready to work with the FHFA and other federal housing agencies, the GSEs, stakeholders, and our members to enhance credit accuracy, reduce prices, and empower consumers by fully raising the bar in competition and innovation.