Shares of Fair Isaac Corp. (NYSE:FICO) are trading lower Friday after Federal Housing Finance Agency Director Bill Pulte instructed government-sponsored enterprises Fannie Mae and Freddie Mac to immediately approve all mortgage lenders to utilize the VantageScore 4.0 credit scoring model.
- Fair Isaac stock is taking a hit today. Why is FICO stock falling?
FHFA Opens Door to VantageScore for All Mortgage Lenders
In social media posts published Thursday evening, September 3, Director Pulte announced an immediate expansion of the VantageScore rollout, effectively ending FICO’s decades-long single-model monopoly in the government-backed mortgage market.
“Fannie and Freddie’s initial rollout of VantageScore has been incredibly successful, with 50 lenders delivering loans. So, effective immediately, I’m instructing Fannie and Freddie to approve all lenders to use VantageScore,” Pulte wrote.
Pulte criticized FICO’s pricing power during his announcement, alleging that the company had increased the cost of obtaining a credit score per person by 1,800% since 2020.
VantageScore, a joint venture owned by Equifax, Experian and TransUnion, reported that its 4.0 model had already captured over 9% of securitized Fannie Mae and Freddie Mac mortgages during an initial limited rollout that began in May.
Threat to High-Margin B2B Scoring Revenue
The directive hits FICO at the core of its business model. Scores segment revenue rose 41% year-over-year in FICO’s most recent fiscal quarter, with mortgage originations representing more than 60% of total Scores revenue.
By opening Fannie and Freddie eligibility to VantageScore for all lenders, the FHFA eliminates FICO’s sole-source regulatory mandate and exposes its pricing strategy to direct market competition.
Adding to sector-wide uncertainty, Pulte signaled that the FHFA is also evaluating a potential transition to a “bi-merge” reporting requirement, which would allow lenders to pull data from two credit bureaus rather than three, further challenging traditional credit reporting workflows.
FICO Shares Slide Friday
FICO Price Action: Fair Isaac shares were down 15.30% at $947.71 at the time of publication on Friday. The stock is near its 52-week low of $870.01, according to Benzinga Pro data.
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