2 minute read
The U.S. Mortgage Insurers (USMI), the mortgage insurance trade group, has solidified its commitment for its members to work with the Federal Housing Finance Agency to implement VantageScore 4.0.
In a blog post published on Wednesday, the trade group said that it welcomed FHFA Director Bill Pulte’s July announcement that Fannie Mae and Freddie Mac would immediately begin accepting loans that used the VantageScore 4.0 algorithm.
Additionally, the USMI reassured the FHFA that its members would be ready to accept loans that used VantageScore 4.0 “in accordance with the [government-sponsored enterprises] timelines and guidance.”
Earlier this summer, after Pulte’s announcement, there was some speculation as to whether private mortgage insurers had the capabilities and would be willing to underwrite policies on mortgages that used VantageScore 4.0. This would impact the number of loans the government-sponsored entities (GSEs) would purchase, as they do not accept mortgages with loan-to-value ratios over 80% without some form of credit enhancement. Data from the USMI shows that in 2024, roughly 800,000 conforming loans required private mortgage insurance as a credit enhancement.
Prior to Pulte’s announcement, the Classic FICO model was the only algorithm accepted by the GSEs. According to the FHFA, as it currently stands only Classic FICO and VantageScore 4.0 are allowed to score mortgages sold to Fannie Mae and Freddie Mac.
“Pursuant to Director Pulte’s announcement, USMI members will continue to actively work with the GSEs and update technology systems to implement this lender-choice credit score policy. USMI and its members support modernizing credit score models and will be ready to accept loans with VantageScore 4.0 credit scores in partnership with the GSEs,” the blog post stated.
