In a significant development for the housing market, Fannie Mae and Freddie Mac are set to embrace new credit scoring methods that factor in rental and utility payment histories, as announced by a federal official on Wednesday. This initiative seeks to enhance access to affordable mortgages, aligning with the goals of the Trump administration. According to William Pulte, Director of the Federal Housing Finance Agency (FHFA), these key mortgage guarantors will now recognize mortgages evaluated using the VantageScore 4.0 model, which leverages sophisticated data analytics for score generation. Additionally, plans are underway to adopt a similar modified score approach from FICO. The incorporation of these scores into the guarantee process signifies a milestone, especially since the FHFA approved these models last year. In tandem, Housing and Urban Development Secretary Scott Turner indicated that his agency will also consider these scoring models for mortgages backed by the Federal Housing Administration. Officials believe that broadening the range of accepted credit scoring models will foster competition and potentially reduce mortgage expenses, thus providing opportunities for prospective homebuyers who previously faced hurdles in securing affordable financing. Pulte emphasized in his statement, “We are modernizing credit scoring with more predictive models, helping millions of Americans who responsibly pay rent qualify for mortgages. That’s fair, it’s commonsense, and it’s finally delivering the benefits of competition to homebuyers nationwide.” The Trump administration has heightened its focus on housing affordability recently, aiming to tackle prevailing concerns over escalating prices ahead of the upcoming midterm elections in November, during which the Republican Party will aim to maintain slim majorities in Congress. Reporting by Pete Schroeder and Douglas Gillison; Edited by David Gregorio.
