FHFA Orders Fannie and Freddie to Let All Approved Lenders Use VantageScore 4.0

Federal Housing Finance Agency Director Bill Pulte instructed Fannie Mae and Freddie Mac to approve all of their already-approved lenders to use VantageScore 4.0 for eligible single-family loans. The change ends a limited pilot that began in May and that FHFA said already included 50 lenders delivering loans.

• FHFA's directive makes VantageScore 4.0 a broad, programwide option for conventional loans sold to the two government-sponsored enterprises (GSEs). Previously, the GSEs limited access to a smaller set of approved originators during a phased rollout.

• The model is developed by the three major credit bureaus and uses trending data, machine learning, and the ability to count on-time rent payments.
• According to the model's owner, it can score an additional 33 million adults and cover about 94% of American adults.

• FICO Score 10T is a newer FICO product that looks at about 24 months of credit behavior rather than a single snapshot. As of this change, 10T is not accepted by the GSEs for delivery.

Practical effects for lenders and borrowers

• Lenders approved by Fannie Mae and Freddie Mac can now choose to use VantageScore 4.0 on eligible loans. Reports in the industry also note lenders generally may not mix Classic FICO and VantageScore 4.0 on the same loan file, so originators must pick one score per file.
• Borrowers with thin credit histories or consistent rent payments may gain better access to mortgage credit under VantageScore 4.0 because it can score more people and incorporate rent payment data.

• FHFA has indicated continued engagement with both scoring vendors to push for competitive pricing and broader adoption. Fannie, Freddie, and other agencies such as HUD previously signaled openness to the newer scoring models on certain programs.

VantageScore 4.0 as an alternative to Classic FICO for GSE-eligible loans. The practical result may be more mortgage options for borrowers with nontraditional or thin credit histories, while FICO's 10T remains under negotiation for broader GSE acceptance.