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FHFA moves Fannie and Freddie to a unified LLPA grid for scores
The shift eliminates a prior 20-point adjustment between Classic FICO and VantageScore 4.0, raising questions about how mortgage-backed securities investors will price risk.
HousingWire reports that the Federal Housing Finance Agency will move Fannie Mae and Freddie Mac to a single loan-level price adjustment, or LLPA, grid for mortgages using Classic FICO and VantageScore 4.0.
The change eliminates a prior 20-point calibration that had made VantageScore pricing less favorable, a move lenders say could accelerate VantageScore adoption.
At HousingWire’s Mortgage Banking Summit in Dallas, participants said the update also creates uncertainty about how MBS investors will treat any perceived risk differences between loans scored with FICO versus VS4, since the new approach applies the same LLPAs to both.