Written by: Internal Analysis & Opinion Writers
FHFA has released detailed responses to lender questions concerning its recent directive expanding the use of VantageScore alongside FICO for mortgage underwriting. These clarifications are meant to smooth integration, maintain data consistency, and address concerns about compliance and operational challenges.
At the heart of the update is the confirmation that lenders can now submit either VantageScore 4.0 or FICO as the primary credit score when submitting loans to Fannie Mae and Freddie Mac. Under the revised policy, tri-bureau credit pulls using either scoring model fulfill eligibility criteria. Lenders are expected to consistently use the same score model for loan decisioning and resubmission, ensuring clarity and fairness across loan applications.
FHFA stressed that the choice of credit score model remains a lender decision. Institutions may select between VantageScore or FICO—or even utilize both—based on internal risk frameworks. The directive also underscores the importance of disclosing to underwriters and investors which model was used, and ensuring systems correctly map credit score banding when calculating pricing, eligibility, and automated underwriting feedback.
The agency emphasized that any fallback to a second score model must be supported by proper documentation. If discrepancies arise between models or changes unexpectedly, lenders must retain records showing why a different model was chosen. This ensures regulatory consistency and audit readiness, especially during examinations conducted by FHFA or GSE oversight teams.
Transition guidance accompanies the rollout. FHFA clarified that loan files in underwriting as of July 1 may continue under previous FICO-only rules, even if closed later. After July 15, all new submissions should comply with the updated policy. Lenders were advised to update their origination platforms, pricing engines, and investor disclosures by that threshold date to avoid mismatches and system errors.
One major concern addressed was the impact on loan pricing adjustments. Because FICO and VantageScore have different scoring bands and consumer distributions, FHFA recommended risk-adjusted pricing tools that incorporate consistent scoring thresholds. The answer suggests financial institutions should test scenarios using both models to calibrate portfolios and avoid unexpected shifts in risk-based pricing or eligibility.
FHFA also addressed questions regarding manual underwriting and manual exception loans. In these cases, lenders may still use other scoring references, including non-traditional or proprietary models, but must document decision criteria and ensure comparisons align with automated scoring standards. The objective is to provide flexibility while maintaining accountability and transparency.
Agencies and associations had asked about impacts on servicing data and loan performance tracking. The FHFA acknowledged that any model shift could create statistical distortions in default modeling or loss forecasts. To manage this, it advised lenders to apply consistent scoring methodology across portfolios for at least 12 months after the switch, enabling proper analytics and comparison baselines for performance management.
Training and automation were also discussed. FHFA encouraged lenders to update training modules and system scripts to reflect the new policy, including disclosures for loan officers, underwriters, and investors. This ensures that professionals throughout the loan value chain are aligned and systems display scoring model provenance accurately.
A conclusion section outlines the broader intent behind these changes: to enhance competition, provide more consumer options, and encourage innovation in credit risk measurement. FHFA highlighted that the shift could expand access to credit, especially for borrowers with thin credit files or intermittent payment histories, as VantageScore tends to include rent, utility, and other non-traditional data.
Industry reaction has been cautiously optimistic. Many lenders appreciate the flexibility but acknowledge the compliance challenges involved. As one mortgage servicer put it, integrating VantageScore for investor delivery and risk reporting requires technological and operational updates—but could pay dividends in a more nuanced understanding of borrower risk.
The FHFA confirmed that it will monitor implementation through routine oversight and reporting. Lenders are expected to submit quarterly updates on scoring model usage and associated loan performance, ensuring that the policy’s impact can be tracked and adjusted if needed.
As lenders prepare to update origination systems, compliance procedures, and staff training, FHA’s detailed Q&A guidance provides a framework to ensure a smoother transition. A careful rollout should support broader credit access while maintaining investor and regulatory confidence in underwriting standards.
