Pulte Just Opened the VantageScore Floodgates. Who’s Ready?

FHFA Director Jason Bourne Bill Pulte unleashed a tweet storm for the ages Thursday night & shares of FICO, Experian, Equifax & TransUnion are getting 🥊rocked.

But for mortgage lenders, the immediate question isn’t what happens to those stocks. It’s: Who can actually capitalize on what Pulte just did?

In today’s edition, we unpack the dizzying implications of FHFA’s credit-score offensive & reveal which lenders appear actually ready to send meaningful VantageScore 4.0 volume to the GSEs. Plus, Fay Group, parent of Florida-based Fay Servicing, has acquired a $1B Midwest IMB. We’ve got the scoop! And Fannie Mae just made a guideline change that could create some very interesting calls for your pipeline.

Here’s a pretty common scenario: You’ve got a borrower sitting on a 3.1% mortgage, but her family is outgrowing the house & she wants something bigger. There is, however, absolutely no freakin’ way she’s giving up that 3.1%, right? Especially w/ rates at like 7%.

So the obvious move is to keep the house, turn it into a rental & use the rent to help qualify for the next one, right?

Except that created a pretty absurd 🐔chicken-and-egg🥚 problem. To count rental income, the borrower typically needed a signed 12-month lease, security deposit & first month’s rent before closing on the new house. While she’s still living there & while she’s still house hunting. And while she has no freakin’ idea when she’s moving out.

Well, good news, Scoopers: Fannie just made that conundrum a whole lot easier!

For an eligible departing residence, lenders can now use documented market rent instead. Think an appraisal rent schedule or other qualifying market-rent documentation—w/o first having to put a tenant in the house.

The familiar 25% haircut still applies. So if the house can rent for $2,400 a month, $1,800 can be used to offset the existing housing payment. If that payment is $1,900, the borrower is carrying $100 into the new file instead of the full $1,900.

That can be the difference between sorry, you don’t qualify & when do you want to close? Might be a good week to comb through the database & make some calls, yeah? The incomparable Jon Overfelt has more details if you’re interested.

OK, where to even begin? Here are some highlights from Thursday night’s Pulte tweet 🍜soup:

And he didn’t stop there! FHFA is seriously considering a bi-merge model (☎️ Hello, Sandra Thompson—is that you on the line?) & Pulte later said the regulator is also studying the possibility of using just one credit report.

He accused the bureaus of failing to sufficiently engage w/ FHFA on reform & employing “cartel-like” tactics.

I reached out to sources at the bureaus & FICO, but everyone is being rather hush-hush about the whole thing. Mortgage trade groups, as you’d expect, were pretty damn happy. But buried beneath all the market-moving tweets is a much more practical question for lenders: Who is actually ready for this?

Pulte said roughly 50 lenders are already sending VantageScore loans to Fannie & Freddie. But sources I spoke w/ say the list of lenders sending measurable VS4.0 volume is much, much shorter. The names that keep coming up are