The Community Home Lenders of America (CHLA) is calling on the Federal Housing Finance Agency (FHFA) to expedite the integration of VantageScore 4.0 into conventional mortgage underwriting to combat what it describes as FICO’s “monopoly pricing capability.”
In a letter sent Monday to FHFA Director Bill Pulte, the CHLA cited a 1,567% increase in FICO credit score prices over the past three and a half years.
This surge has driven total credit report costs per closed loan to routinely exceed $550, according to the trade group, factoring in multiple pulls for individual borrowers. For comparison, a 2022 CHLA survey calculated total credit report costs at just $50 per closed loan.
According to the CHLA’s recent addendum to its January 2024 white paper, FICO’s per-pull cost has surged from just 60 cents in 2022 to $10 today. The organization, which represents small and midsized independent mortgage banks, described the current situation as “mortgage inflation run amok.”
In its letter to Pulte, the trade group emphasized that it had correctly predicted last year’s FICO price hikes. It is now warning that FICO could implement another round of increases by as much as 50% in the fall of 2027.
Following the release of the CHLA white paper addendum on March 31, a FICO spokesperson told Scotsman Guide that its scores are “just one component of a broader tri‑merge credit report bundled product,” noting that “under the $10‑per‑score model, FICO’s maximum contribution to a tri‑merge bundle would be $30” per borrower.
“Questions about total credit report or tri‑merge costs are therefore best directed to the credit bureaus,” the spokesperson stated, referring to the three major credit reporting agencies: Equifax, Experian and TransUnion.
The CHLA noted in its letter to Pulte that FICO reports its mortgage credit score channel as its top source of revenue growth and profitability, claiming no other sector in the mortgage market holds such a monopoly over an essential loan origination component. In addition, the CHLA asserted that if FICO halted its annual fall price hikes, the rest of the credit scoring industry would likely follow suit.
To alleviate the financial burden on borrowers, the trade group is urging the FHFA to immediately approve VantageScore 4.0 — a competing mortgage credit scoring model from a company jointly owned by the big three credit bureaus — without waiting for the FICO 10T model to be fully tested and vetted.
Beyond supporting VantageScore, the CHLA voiced its backing for maintaining the current tri-merge credit reporting system — another contested topic in the mortgage credit space — arguing that a proposed shift to a single-bureau pull would introduce more uncertainty and risk to Fannie Mae and Freddie Mac loans and potentially increase consumer costs.
Additionally, the association reiterated a proposal for Fannie and Freddie to leverage their massive analytics to establish their own credit-evaluation subsidiaries, “because four credit score companies are better than two.”
The CHLA argued these subsidiaries could eventually be sold into the open market, ensuring they serve as “independent umpires” that inject much-needed competition into the industry.
