This month, the Federal Housing Finance Agency (FHFA) announced an accelerated timeline for VantageScore adoption in the mortgage marketplace. Lenders who want to sell mortgages to Fannie Mae and Freddie Mac next year will begin using VantageScore 4.0 scoring models by Q4 2025.

We are pleased that the FHFA has accelerated the release of VantageScore 4.0 historical data so that the industry can continue to speed up its implementation of VantageScore 4.0 scores. The adoption of VantageScore 4.0 is making a significant positive impact in addressing the racial homeownership gap, as well as improving the safety and soundness of the mortgage finance system.  We remain committed to working proactively and transparently with all stakeholders towards a smooth transition to more inclusive and predictive scores,” said Tony Hutchinson, SVP of Industry and Government Relations at VantageScore.

The FHFA emphasizes that VantageScore adoption will help mortgage applicants more easily enter the marketplace. VantageScore 4.0 is touted by industry thought leaders as more accurate and inclusive than the scoring models currently required by Fannie Mae and Freddie Mac today.

“Synchronizing bi-merge credit reporting with the implementation of the new credit score model requirements will reduce complexity for market participants, which is a key objective of our transition efforts,” FHFA Director Sandra L. Thompson said in a statement. “The release of historical data on tens of millions of Enterprise loan acquisitions affirms the commitment of FHFA and the Enterprises to a robust, transparent implementation process.”

Recently, VantageScore released new research on the quantitative impact of requiring VantageScore® 4.0 credit scores as mandated by the Federal Housing Finance Agency (FHFA) for all Government-Sponsored Enterprise (GSE)-funded mortgages beginning in 2025. The research findings note that an estimated 4.9 million new borrowers could gain access to the mortgage market, and lenders could originate as many as 2.7 million mortgages, with an annual loan volume as high as $1 trillion.

Read more here: https://www.inman.com/2024/02/29/new-rules-for-scoring-mortgage-borrowers-coming-in-q4-2025/

Review the findings of VantageScore’s recent whitepaper and explore the potential impact of mandating VantageScore 4.0 for GSE-funded mortgages here.