Industry Panel Outlines Concerns, Opportunities With GSEs, Credit Scoring
(From left: Bob Broeksmit, Ramon Gomez, Mark Jones, Owen Lee and Stanley Middleman, by Anneliese Mahoney)
LAS VEGAS–Two of the hottest topics in mortgage banking currently are the respective futures of the GSEs and credit scoring. With that in mind, a panel of industry leaders took the stage at the Mortgage Bankers Association’s Annual Convention and Expo to share their thoughts.
Future of the GSEs
Mark Jones, president of Union Home Mortgage and 2024 MBA chairman, listed some concerns when it comes to a potential GSE release.
“The No. 1 thing that we have to be concerned with is to make sure that some form of government guarantee remains in place,” he said. He also pointed to crystalizing where the bright line between the primary and secondary markets is. And, he noted that maintaining a level playing field remains important for the industry.
Owen Lee, CEO of Success Mortgage Partners and 2026 MBA Chair-Elect, said it seems like there’s now a rush to get the GSEs out of conservatorship. While that’s not necessarily a bad thing, he said, “there is a huge downside to getting it wrong” and a lot of questions that need to be answered.
“The U.S. housing system is the envy of the world,” said Ramon Gomez, managing director at Chase. “The value of the GSEs is in preserving that framework.”
“Preserving the value that exists right now and preserving the value that was created through all the improvements that have been achieved since the conservatorship was created is essential,” he continued.
And this is all supposing that GSE release happens in the near future. Stanley Middleman, CEO of Freedom Mortgage Corp., noted that the GSEs being released from conservatorship is still a big “if,” at this point.
Future of Credit Scoring
Panelists tackled another pressing issue for the industry: credit scoring, including the current tri-merge system and its increasing costs.
“It’s affecting our members, and by extension–more importantly–it’s affecting our borrowers,” Lee said, pointing to a lack of competition.
The panel moderator, MBA President and CEO Bob Broeksmit, CMB, noted that Fannie Mae’s recent quarterly purchases had a weighted average credit score of 757, with 75% over 740 and only 6% below 680. He gave the example of pulling one file, seeing a 750, and getting two other files that are 752 and 748–observing that at that point, there’s not that much more information to be gleaned.
The panel topic came in light of the recent announcement by FHFA Chief Bill Pulte regarding VantageScore 4.0.
Middleman highlighted that one risk of moving away from the current system is that the industry shouldn’t be shopping for the best credit. “We want to have a housing system that’s a foundational piece, that’s reliable, and if we build credibility through that credit reporting agency, there’s a value there,” he said.
Like with the GSEs, the panelists were clear that we don’t know exactly what a new credit scoring environment would look like.
“We’re not talking about going to one for every mortgage in America, right? We’re talking about going to one or going to two, or getting some type of waterfall system,” Lee hypothesized.
Middleman also pointed out how much more inefficient and costly underwriting was in a pre-credit score world.
“Nobody is saying we want to go back to that,” Broeksmit said. “It’s just we think there’s a better way, and we’re energized [and] excited about some of these changes, because we know that it’s going in the right direction.”
