While FICO and Equifax continue throwing statistics and barbs at each other, mortgage bankers are more worried about what it costs to purchase scores on behalf of their borrower than whose score is more predictive.
“Once we got the trigger leads bill signed, the cost of credit scores became the number one issue for the business,” Mortgage Bankers Association (MBA) Chair-Elect Owen Lee, CEO of Success Mortgage Partners, said during the “From the Front Page to the Main Stage” session at the association’s Annual Conference and Expo in Las Vegas. “The prices go up and up and up … but I’m pretty sure the product is the same, same, same.”
Lee said he’s sure FICO, VantageScore, and other scoring systems all have their own spin on pricing, but at the end of the day, it’s “affecting our members, and by extension, their borrowers.”
Lee added, “This has become a really big issue. It’s been going on for three years, and there’s nothing to think it won’t continue.”
Mark Jones, president of Union Home Mortgage and a past MBA chair, agreed, “It’s crushing our membership.”
Lee urged lenders to “talk about this issue with the biggest megaphone possible.”
He said, “we need to be exhaling as much as possible, as prices have gone up 500%–600% over the past three years.”
That number startled Stanley Middleman, CEO of Freedom Mortgage Corporation, who admitted he hasn’t paid much attention to the scoring issue of late.
“How much?” he asked as if shocked.
Still, Middleman noted that “everything’s more expensive these days,” so the price hikes should not be that surprising. Besides, he added, it’s worth the cost if it “gives investors peace of mind.”
Middleman added, “If it builds credibility, there’s a value there. You have to make loans that you believe in.”
But MBA President and CEO Robert D. Broeksmit, CMB, said the gripe isn’t so much that scores are much more expensive, but that Fannie Mae and Freddie Mac require that lenders pull scores from all three credit bureaus.
Borrowers at the higher end of the scoring spectrum don’t need three scores, just one will suffice, Broeksmit said. And Lee agreed.
“Not every loan in America need three scores,” Broeksmit added. “Not when one is just two points lower than the other and the third is two points higher. What’s the difference? You should be able to rely on just one.”
Broeksmit said the MBA is not advocating for wholesale changes in credit scoring, but rather, more judicious rules and pricing.
“At the end of the day,” Broeksmit said, “we think there’s a better way.”
