FICO Score 10 T Adoption Reaches Significant Milestone by Serving $300 Billion in Eligible Mortgage Portfolios
- FICO Score 10 T adoption reaches $300 billion in eligible mortgage portfolios
- Top lenders like Liberty Home Mortgage embrace FICO's latest scoring model for non-conforming loans
- FICO Score 10 T incorporates trended credit bureau data for better credit decisions
- Up to 5% increase in mortgage originations and 17% reduction in default risk with FICO Score 10 T
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Insights
The adoption of FICO Score 10 T by significant mortgage players positions FICO as a company geared towards innovation in credit scoring. This move is expected to enhance the predictive power of credit assessments, which may lower default risks and lead to more accurate financial forecasting for lenders.
For investors, this can translate to improved bottom-line results for FICO as lenders, such as Liberty Home Mortgage, implement the scoring model for non-conforming loans. The reported potential to increase mortgage originations by up to
Examining the broader market, as more lenders adopt this scoring model, there may be a ripple effect on the mortgage industry, potentially increasing the overall quality of mortgage originations. Investors should monitor the uptake of FICO Score 10 T across the sector, as it could become an industry standard, further cementing FICO's market position.
The strategic alliance with Lenders One® Cooperative suggests that FICO is not only expanding its product use but also fostering relationships that could provide a competitive edge. This kind of partnership is key in capturing market share within the financial services industry.
From a retail investor's perspective, understanding the potential market expansion FICO could achieve is essential. The emphasis on education and adoption through Lenders One signifies that the market for FICO's scoring models will likely grow. Successful integration with Liberty Home Mortgage and other pioneering lenders could serve as a proof of concept, encouraging more conservative players to follow suit.
It’s worth noting that a switch to a new scoring model could imply initial costs and adjustments for these mortgage entities, which could be a consideration in the short term. However, the long-term benefits of more accurate credit assessments could outweigh these initial costs, making it a positive development in the eyes of investors.
Liberty Home Mortgage latest to proactively adopt FICO’s newest, most innovative and predictive scoring model
Additionally, Liberty Home Mortgage is the latest to choose to adopt FICO® Score 10 T for non-conforming loans. It joins a growing number of mortgage lenders embracing FICO’s newest, most innovative, and most predictive scoring model.
Among the pioneering organizations to embrace FICO® Score 10 T for non-conforming mortgage loans are: Movement Mortgage, a top 10 retail mortgage lender; CrossCountry Mortgage (CCM), the nation’s number three retail mortgage lender; Primis Mortgage, a subsidiary of Primis Bank; and Premier Lending Inc. (Premier Lending), a family-owned
Liberty Home Mortgage’s proactive adoption of the new model results from FICO’s strategic relationship with Lenders One® Cooperative, a national alliance of independent mortgage bankers, banks and credit unions dedicated to helping its members maximize revenue, reduce costs, and improve decision making. Lenders One connects members with preferred solution and technology providers and is the first organization of its kind to collaborate with FICO to support member education and adoption of FICO® Score 10 T.
“Liberty Home Mortgage is always striving to promote homeownership, and we believe that FICO continues to work tirelessly to help more consumers become homeowners and better fulfill the American Dream,” said Khash Saghafi, president of Liberty Home Mortgage Corporation. “FICO is such a long-established and well-respected pillar of the financing industry that we jumped at the chance to work closely with them and their amazing team to help consumers and move this industry forward.”
Introduced in 2020, FICO® Score 10 T incorporates trended credit bureau data to further enhance the score’s predictive power. Lenders using FICO Score 10 T for non-conforming mortgage products can better evaluate new applications in real-time and can make more data-driven lending decisions.
“We are seeing incredible momentum with lenders realizing the power of our most innovative and predictive score, FICO Score 10 T,” said Joe Zeibert, vice president of Mortgage and Capital Markets at FICO. “FICO is looking forward to enabling more lenders to make better informed credit decisions, while responsibly helping more consumers achieve the dream of homeownership.”
Zeibert, along with Jason Stenger, chief operating officer of Movement Mortgage, were featured speakers at FICO® World on Tuesday, April 16, discussing how the latest scoring models can increase liquidity for lenders and help more Americans realize their dreams of homeownership.
As pointed out by Stenger, FICO Score® 10 T can provide greater precision in making lending decisions. The model can be used by lenders to better manage credit risk and default rates when extending competitive credit offers to consumers. FICO Score 10 T can enable an increase in mortgage originations of up to 5 percent (without taking on additional credit risk) and reduce default risk and losses by up to 17 percent. The increased predictive power can also help lenders project cash flow more accurately.
FICO is committed to assisting mortgage industry participants looking to transition to its most current model, FICO® Score 10 T. The FICO Score Migration Resource Center provides a detailed guide to support organizations through their score transition with key planning steps and activities, in addition to implementation best practices.
About FICO
FICO (NYSE: FICO) powers decisions that help people and businesses around the world prosper. Founded in 1956, the company is a pioneer in the use of predictive analytics and data science to improve operational decisions. FICO holds more than 200 US and foreign patents on technologies that increase profitability, customer satisfaction and growth for businesses in financial services, insurance, telecommunications, health care, retail and many other industries. Using FICO solutions, businesses in more than 100 countries do everything from protecting 4 billion payment cards from fraud, to improving financial inclusion, to increasing supply chain resiliency. The FICO® Score, used by
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View source version on businesswire.com: https://www.businesswire.com/news/home/20240417313322/en/
Julie Huang
press@fico.com
Source: FICO
FAQ
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