Bill Pulte blew the doors off credit score modernization efforts in early September by instructing Fannie Mae and Freddie Mac to accept VantageScore 4.0 scores for mortgages from all lenders, opening up a pilot program first rolled out in April.

VantageScore was jointly launched in 2006 by the three national credit bureaus — Equifax, Experian and TransUnion — to compete with the Classic FICO credit score.

But perhaps more consequential than imposed adoption across the primary mortgage market was how Pulte flipped the script on secondary mortgage markets broadly viewed as the kink in the hose of more rapid progress toward credit score modernization.

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On Sept. 9, Pulte — who serves as director of the Federal Housing Finance Agency (FHFA) and board chair of its regulated entities, Fannie Mae and Freddie Mac — said that all mortgage-backed securities (MBS), credit risk transfers and securitized products issued by the pair will now carry a VantageScore 4.0 score and the traditional FICO credit score.

“This allows everyone to keep using their FICO-based models even if there is a VantageScore,” said one industry source, adding that his firm’s analysis “shows that having both scores can improve forecasts and modeling.”

In the near term, the announcement may do little to change investor decisioning based solely on VantageScore models. Investors will be receiving VantageScore data without any obligation to internalize or operationalize that ride-along score in any capacity, and FICO scores are still required.

But by essentially force-feeding VantageScore to secondary markets, experts tell Scotsman Guide that the move stands to accelerate investor adoption by positioning secondary market participants to be at a competitive disadvantage should they choose to not begin incorporating VantageScore into their databases and analytics.

“Right now, whole loan investors that are buying loans and aggregators aren’t quite ready for this, even though they’re doing it themselves on the retail side of things,” explained Chris Bennett, founder and chairman of Vice Capital Markets, a mortgage hedging advisory firm. “But they are going to be ready very quickly.”

By requiring that Classic FICO scores still accompany VantageScore submissions, experts also point out that the FHFA has solved for two major impediments to more rapid VantageScore adoption: substituting FICO scores with VantageScore outright or instituting lender choice, which have been seen as non-starters because of likely data degradation.

Placing VantageScore into existing secondary market data flows — alongside required FICO scores — thrusts the new model into what effectively becomes a live benchmarking exercise for loan performance, pricing and historical tracking. Widespread reliance on legacy technology in the primary market has made collecting and tracking VantageScore performance a disparate challenge for lenders.

“One tough part is that the loan origination system providers haven’t done a good job of building out the capacity to house these different credit scores in their system,” said another industry source. “They are definitely catching up and some already have this built into their platforms, though.”

When the FHFA first rolled out VantageScore adoption for a few dozen of the country’s largest mortgage lenders several months ago, Bennett immediately began building the data capacity to include VantageScore on mortgage bid tapes his firm provides to investors. Roughly 1 in 15 U.S. mortgages are traded or hedged by Vice Capital, the company says.

Syncing up risk tolerances and operational capacities across lenders, investors and servicers remains the difficult balance that market participants and regulators continue to navigate. For some companies, these changes are fairly new. For most companies, however, the changes are really new.

“We got to make sure that these lenders are actually comfortable with the risk of VantageScore 4.0. It’s not enough to just say, ‘Well, I can sell the loan and it should be the same amount of money,’” said Bennett. “The lenders themselves need to be comfortable, as does the buyer of any servicing rights that go along with this, or a whole loan buyer.”