"Mortgage industry executives express concern that the shift to new credit score models could raise mortgage delinquencies and reshape pricing grids at the GSEs, ultimately pushing costs back onto borrowers. The FHFA has indicated that LLPAs for loans submitted under the new models may be more costly for lenders, raising questions about the best interests of borrowers."
"Jennifer McGuinness, CEO of Pivot Financial, highlights that if the industry moves to lender choice for the highest score, GSE income could drop significantly. She questions how the GSEs will address the potential $17 billion revenue gap, suggesting that LLPAs will be adjusted to add extra expenses, impacting borrowers."
Mortgage executives warn that introducing FICO 10T and VantageScore 4.0 could lead to higher mortgage delinquencies and increased costs for borrowers. The GSEs are expected to adjust loan-level price adjustments (LLPAs) to compensate for lost revenue, potentially shifting expenses back to borrowers. Recent studies indicate significant revenue generated from LLPAs based on Classic FICO Scores, and a transition to new models could result in a substantial drop in fee income. Industry experts express concern over the implications for borrowers and the overall mortgage market.
Read at www.housingwire.com
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