Loans

Federal Home Loan Bank of San Francisco increases Vantagescore



The Federal Home Loan Bank of San Francisco has begun accepting mortgages underwritten using Vantagescore 4.0, one of the advanced credit metrics used by other government-related entities. It is also expected to be adopted.

The measures announced on Monday may help expand the scope of credit and help housing initiative For racial equity, said Teresa Bryce Bazemore, current president and CEO of the San Francisco Home Loan Bank.General Bazemore Retiring later this year.

“This is significant in terms of the push to make borrowing more affordable to more people,” Bazemore said. He said the effort has been bearing fruit since it became clear a few years ago that the scores were showing. Has the potential to expand home loans.

A total of 33 million people nationwide are unable to have credit scores established using traditional models, and Bazemore estimates that 5.5 million people in the San Francisco area could be scored using the new metric, which takes into account payment methods such as rent and other data beyond that. Typical debt history.

A smaller part of these 33 million is equivalent to The origins of $1 trillionThey have scores of 620 or higher and are between the ages of 25 and 65, making them likely candidates for a mortgage, according to a study released by Vantagescore last year.

Vantagescore did not immediately calculate how many people in the San Francisco area are mortgage-ready, but Tony Hutchinson, senior vice president of industry and government relations, was optimistic the move would expand lending overall.

“We think this will be an impetus for many on the fence who may consider adopting the score before it is fully implemented by the major government-linked mortgage investors,” Hutchinson told Home Lenders.

At least one member of San Francisco’s home loan lender, Patelco Credit Union, has said it already uses more modern scoring in other types of consumer finance where credit metrics have a stronger foothold and plans to Expand this use to home loans.

“We look forward to adding Vantagescore 4.0 to mortgages in the future,” Richard Wada, chief lending officer at Patelco, said in a press release.

San Francisco home loan banks will also consider using FICO’s advanced model, Bazemore said.

In adopting either of these advanced scores, lenders face the high cost of additional models It is said that the existing ones are increasing in priceThey also expressed concern about the lack of mortgage lending records in these indicators.

Bazemore said the move by the San Francisco Home Loan Bank, an initiative of the government-sponsored enterprises Fannie Mae and Freddie Mac, was not a legislative mandate. It limits credit reporting costs by allowing mortgages using only Vantagescore as collateral.

Hutchinson and Bazemore said district officials have carefully studied the score over the past few years and conducted blind tests, with credit indicator providers providing the data but not seeing the results, who noted that the score was That analysis performed well in the following areas.

Given the above-mentioned concerns from mortgage lenders about using advanced credit scores, one suggestion from Hutchinson is to align them with Special Purpose Credit Planwhose applications are typically limited to targeted geographic areas

“One thing we think a lot of lenders or mortgage originators should do is test it out on a small portfolio so they can get some practical knowledge, especially if they don’t want to commit a lot of money up front without really going all-in,” He said.





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