When will Fannie, Freddie switch to new credit-scoring model?

Mortgage behemoths cling to models that unfairly penalize millions of wannabe borrowers

TRD MIAMI /
Jan.January 27, 2017 03:45 PM
Albany Houses and a good FICO credit score

Albany Houses and a good FICO credit score

From the New York magazine’s January issue: Borrowers probably know that their credit score is a crucial factor in their ability to qualify for a mortgage. They might also know that their score can vary depending on the type of scoring model their lender uses. If it’s an old, outdated version, they might get a lower score. If it’s a newer, more advanced model, they’ve got a better shot at being scored more fairly.

That brings up a long-festering controversy: The two behemoths of the mortgage business — Fannie Mae and Freddie Mac — continue to use a credit scoring model that even its developer, FICO, says is not as “predictive” as its much newer models. Worse yet, Fannie and Freddie require that all lenders who want to submit loan applications to them must use the same, outdated technology. [more]


Related Articles

arrow_forward_ios
Daily Digest Miami

Saks makes bid for Barneys, Eighty Seven Park will offer a certified botanist: Daily digest

Daily Digest Miami

Related is heading to the river, Soffer eyes Fontainebleau Miami Beach expansion: Daily digest

Daily Digest Miami

Edgewater Opportunity Zone site hits the market, FHA will back more condo loans: Daily digest

Daily Digest Miami

WeWork files IPO, Florida needs nearly 670K new apartments to fuel population growth: Daily digest

Mexico Beach, Florida, in the aftermath of Hurricane Michael in 2018 (Credit: Getty Images)

Fitch to include natural disasters risks to RMBS ratings

Fannie Mae CEO Hugh R. Frater, and Freddie Mac CEO Donald H. Layton

Fannie Mae and Freddie Mac financing riskier mortgages to indebted homeowners

Home buyers in front of a house (Credit: iStock)

Lenders opening doors to a wider swath of home buyers

Is the tax overhaul law impacting real estate?

Is the tax overhaul law impacting real estate?

arrow_forward_ios