New FICO credit score for mortgage lenders debutsMortgagePress.comFICO score, Equifax, credit score, BEACON Mortgage Score, mortgage lenders
FICO, a provider of analytics and decision management
technology, and Equifax, a leader in information solutions, have
introduced BEACON Mortgage Score, a new FICO industry score
specifically designed to help mortgage lenders make the best
possible risk decisions when addressing both current homeowners and
those aspiring to own. Equifax plans to make the new score
available in April to mortgage lenders and servicers for use in
their loan servicing decisions including mortgage loan
modifications.
The new score builds upon the predictive power of today's BEACON
credit risk score which is widely used in the mortgage industry. By
focusing specifically on mortgage risk performance, FICO scientists
have developed a version of the BEACON score with significantly
greater power for assessing mortgage repayment risk. In early
validation testing, the performance of BEACON Mortgage Score was
compared to that of the general risk BEACON score when predicting
mortgage repayment risk specifically. The new score identified up
to 25 percent more of the high-risk mortgages and home equity
lines-of-credit that later became seriously delinquent. In light of
today's housing crisis, this new score can aid servicers in earlier
identification of borrowers at risk, mitigating the high cost of
consumers moving to foreclosure.
In business terms, these early results suggest that the use of
BEACON Mortgage Score by the industry potentially can save it $1
billion in foreclosure costs and help keep an estimated 115,000
more struggling homeowners in their homes.
"One of the goals of our alliance with Equifax is to bring both
companies' assets and expertise to bear on the uncertainty facing
lenders, borrowers and investors," said Lisa Nelson, vice president
of global scoring solutions for FICO. "This new score is one of the
first fruits of that alliance, and it couldnt be more timely or
valuable for mortgage lenders, loan servicers and the
securitization industry."
"Everyone in the mortgage industry is working hard to manage
risk more effectively, which will help address the rising
foreclosure rate while allowing servicers to keep their doors open
to qualified new borrowers," said Dann Adams, president of US
Consumer Information Solutions for Equifax. "The BEACON Mortgage
Score is an innovative solution with unprecedented visibility that
will provide greater predictive strength at a time when the
industry needs it most."
To assist clients, BEACON Mortgage Score retains the same
300-850 scoring range, minimum scoring criteria, and inquiry
treatment as previous versions of the BEACON® score. However,
to achieve its significant increase in predictive strength, FICO's
new scoring model assesses several additional data variables
derived from Equifax consumer credit files, selected specifically
to predict mortgage repayment risk. As a result, the model includes
15 additional score reason codes that help lenders understand and
explain the scores.
Businesses interested in more information about BEACON Mortgage
Score are welcome to contact FICO at
[email protected].
For more information, visit www.equifax.com or www.myFICO.com.
