Major home lender calls for GSE acceptance of VantageScore model
Debra Still, president/CEO of Pulte Financial Services, one of the nation’s largest mortgage lenders, recently published an insightful opinion piece on the topic of updated credit scoring models in American Banker’s BankThink section.
Pulte Financial Services is the finance arm of home building giant Pulte Group. Still, formerly the chairman of the Mortgage Bankers Association (MBA), currently chairs the MBA Opens Doors Foundation.
In her article, “New Credit Scoring Models Hold Promise for Access to Credit,” Still weighs in on the ongoing debate over the most effective means for increasing access to credit for qualified mortgage borrowers. She notes that the use of newer, more accurate credit scoring models would help increase the number of eligible U.S. borrowers without impacting credit standards or changing debt-to-income, loan-to-value, or minimum score cut-offs. Still also cites VantageScore’s recent research regarding the impact of and potential upside for the GSEs if they would allow mortgage originators to use updated and more inclusive credit scoring models such as VantageScore 3.0.
Of course, the background of Still’s article is that mortgage originators like Pulte Financial Services are currently prevented from using updated models due to the GSE seller-service guidelines. The service guidelines instead require use of older FICO models, which were built on data and modeling techniques from the late 1990s.
After Still’s article was published, FICO posted a counterpoint to her article. FICO attacked the notion that the GSEs should adopt newer and more inclusive credit scoring models. Although the ability of the VantageScore model to score more people, and thus provide greater access to mortgage credit, is an important supporting point, it is just one of the many reasons that the GSEs should modify their seller-servicing guidelines to support competition among credit score model developers.
As VantageScore continues to advocate for greater credit scoring competition and fairness in the mortgage origination market, the company is grateful for the support of key influencers like Deb Still, whose article has helped build awareness and understanding of this issue.
For a better understanding of how the VantageScore 3.0 model accurately scores more people, and the implications that has for fair lending, please read this white paper on the subject. To follow VantageScore’s efforts in securing GSE acceptance of more inclusive, up-to-date credit scoring models, subscribe to the VantageScore GSE Lockout newsletter.