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Breaking news Fannie and Freddie Mac sticking with Fico

Both Fannie and Freddie Mac are sticking with Fico scoring for at least next 2 yrs. News just broke today. Hope everyone is OK. Enjoy rest of Summer "Mort rates are as low as 08 now is the time to refi even if it's just rate and term. Take care MyFico friends 

Mako50
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Re: Breaking news Fannie and Freddie Mac sticking with Fico

Can you give us a link to the news story you found?

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Re: Breaking news Fannie and Freddie Mac sticking with Fico

Hello, Yes I'd be glad to, I am on so many financial sites all day but I am sure it came over on Microsoft Money or Bloomberg. I hope this helps. I'd be glad to answer any other questions you may have also. 

Glad to help out 

100 % positive that they are sticking with Fico and will continue to use older scoring model not the 9.

Have a great weekend 

Mako50 

Mako50
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Re: Breaking news Fannie and Freddie Mac sticking with Fico

I did some research just now and located what you may have seen:

 

https://www.washingtonpost.com/realestate/fannie-and-freddie-will-stick-with-fico-formula-for-at-lea...

 

The Post is quite reliable, so I am sure this piece largely accurate.  (The only error that jumped out at me was its claim that "Fannie’s and Freddie’s models date to the early years of the past decade."  That's close but not entirely right.  The F&F mandated model for Experian dates back to 1998.)

 

Thanks so much for drawing it to my attention!  It squares with what I guessed, which is no changes in the very near future, but with a recognition that the models are antiquated and leaving open the question of what F&F might be using (say) 4-5 years from now.  There's no question that eventually we'll be switching to more current and reliable models -- the question is when.  Helpful to know (though not surprising) that it won't be in the next two years.

 

FICO itself has wanted F&F to switch to something more recent, and they built a whole new mortgage model (released in 2010) with the obvious belief that F&F were ready to do that.  Definite mistake on FICO's part.

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Re: Breaking news Fannie and Freddie Mac sticking with Fico

I'm very impressed with your response, I'm sorry if you misinterpreted me when I said they were sticking with the older models. When I stated older models I meant the present models they are using now. We both know that it will take much longer than 2 yrs for them to integrate newer models. Both F&F are bieng taken for much to long by the govt. The past Presidency should have long ago let them keep their revenue just like all the other bailouts "We" (Taxpaying Citizens gave them the Money for and they paid it back with interest). F&F got taken. I plus many other shareholders lost a fortune. Many people think they are a govt entity because they are GSE.  They are a public trading company just like any other. It was not their fault for the 08 bubble it was the hedge funds and the sub prime lending. Now after 10 yrs people are still underwater and those who lost there homes are just coming out of bankruptcy. That along with the millinial generation is a major reason why they are increasing the back end to 50%. As one of the last of the  baby boomer generation its been a long hard road back to financial security.  Only if there was  more financial education available to many people. There are 20 million Americans who could be saving hundreds of dollars a month if they were told they were qualified to refinance there mortgage. I hope the best for everyone. We are digging ourselves out from a financial disaster. 

Fico 9 is a great model and every other before it. I personally only want to know MyFico score. That is the only real score I trust.

It's been a pleasure  

Enjoy your evening 

Mako50 

 

Mako50
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Re: Breaking news Fannie and Freddie Mac sticking with Fico


Mako50 wrote:

I'm very impressed with your response, I'm sorry if you misinterpreted me when I said they were sticking with the older models. When I stated older models I meant the present models they are using now. We both know that it will take much longer than 2 yrs for them to integrate newer models. Both F&F are bieng taken for much to long by the govt. The past Presidency should have long ago let them keep their revenue just like all the other bailouts "We" (Taxpaying Citizens gave them the Money for and they paid it back with interest). F&F got taken. I plus many other shareholders lost a fortune. Many people think they are a govt entity because they are GSE.  They are a public trading company just like any other. It was not their fault for the 08 bubble it was the hedge funds and the sub prime lending. Now after 10 yrs people are still underwater and those who lost there homes are just coming out of bankruptcy. That along with the millinial generation is a major reason why they are increasing the back end to 50%. As one of the last of the  baby boomer generation its been a long hard road back to financial security.  Only if there was  more financial education available to many people. There are 20 million Americans who could be saving hundreds of dollars a month if they were told they were qualified to refinance there mortgage. I hope the best for everyone. We are digging ourselves out from a financial disaster. 

Fico 9 is a great model and every other before it. I personally only want to know MyFico score. That is the only real score I trust.

It's been a pleasure  

Enjoy your evening 

Mako50 

 


Hi Mako.  The present models that Fannie and Freddie are requiring lenders to use are indeed very old models.  The models that mortgage lenders use are almost 20 years old (FICO 98 for EX and FICO 04 for EQ and TU).

 

So both adjectibes describe them.  They are "present" -- in the this is what a lender would use today if someone bought a house.  They are also very old in the sense that they are almost 20 years old and FICO itself has come out with other mortgage models since then (FICO 8 Mortgage in 2010, for example).

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Re: Breaking news Fannie and Freddie Mac sticking with Fico

Would a switch be very bad for me? When all these new consumers gain access because of newer models, would that mean I would have to compete with them which gives me less pricing power on my mortgage? If so, should I even try to land a mortgage before models are switched?


Starting Score: Ex08-732,Eq08-713,Tu08-717
Current Score:Ex08-719,Eq08-722,Tu08-717
Goal Score: Ex08-760,Eq08-760,Tu08-760


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Re: Breaking news Fannie and Freddie Mac sticking with Fico

No.  I think you should just assume that you'll have a score that secures you the best rates no matter what model they use.  Because you will, given what I know of your habits.

 

Of course all kinds of things can happen that make a person look back in retrospect and wish that he did buy (when he didn't) or didn't buy (when he did).  Lots of people wish they had not bought their first house in 2007 (say).  These almost all have to do with housing crashes or bubbles some of which can be very localized.  I cannot imagine that any of them will ever have to with hypothetical changes in credit scoring.

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Re: Breaking news Fannie and Freddie Mac sticking with Fico

Good morning, 

 I agree with you, they are sticking with the models which are in place. Fico has the models but they don't want to implement them. I agree with you 100%. I was not trying to say anything different than what you stated. 

Mako50 

Mako50
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Re: Breaking news Fannie and Freddie Mac sticking with Fico


CreditGuyInDixie wrote:

No.  I think you should just assume that you'll have a score that secures you the best rates no matter what model they use.  Because you will, given what I know of your habits.

 

Of course all kinds of things can happen that make a person look back in retrospect and wish that he did buy (when he didn't) or didn't buy (when he did).  Lots of people wish they had not bought their first house in 2007 (say).  These almost all have to do with housing crashes or bubbles some of which can be very localized.  I cannot imagine that any of them will ever have to with hypothetical changes in credit scoring.


I agree that my scores would land me prime rates. I'm just worried about actual housing prices going up due to competition. When the new models allow all these new buyers in, I hope they don't drive housing prices sky high for me. I might not even be able to escape the competition effects by buying before the model change that will introduce competing buyers. Once house sellers anticipate that a flood of new consumers will come in, they wil raise prices.

 

I guess I could hope for a recession to strike as soon as I get a stable job after getting my degree. Then I can buy my house very cheap when everyone else is defaulting.


Starting Score: Ex08-732,Eq08-713,Tu08-717
Current Score:Ex08-719,Eq08-722,Tu08-717
Goal Score: Ex08-760,Eq08-760,Tu08-760


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