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Addressing Concerns

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The following are concerns that have been raised and found to be baseless:

VantageScore’s Ownership

VantageScore provides credible competition to the existing FICO monopoly and the accompanying threat of a monopolist’s unchecked pricing power. Simply put, the greater threat to competition would be the continuation of the longstanding government-sanctioned monopoly that denies lenders the opportunity to choose among validated, statistically sound and approved competing credit score models.

While the 3 national credit reporting companies (CRCs) own VantageScore, concerns about an adverse impact on competition are unfounded.

Competition Would Lead to a “Race to the Bottom”

Model governance practices are in place to guard against any hypothetical declines in the predictiveness of credit scoring models. In addition, since any model approved for use by Fannie Mae or Freddie Mac would be subject to the “standards and criteria” established by FHFA, competition could only result in a race to the top, rather than the bottom – since FHFA’s standards and criteria would set a “floor.”

Model developers would not roll out new models that were less predictive than previous models because lender testing would reject them before implementation. And these new models are ALWAYS subject to regulatory scrutiny when used in a lender’s systems. VantageScore is currently used by over 2,200 financial institutions – all of which presumably tested and continue to test to ensure accuracy.

Industry Conventions/Regulations

Mortgages are not underwritten on credit scores alone. Each consumer’s full credit file, income, employment, debt-to-income ratio (DTI), down payment amount (LTV) , and assets all go into the underwriting process.

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