- 2 months ago
How do you expand access to homeownership without taking on more risk?
On this episode of Power House, Zeb Lowe sits down with Devin Norales, Head of Mortgage and Capital Markets at FICO, to discuss the future of credit scoring and why represents one of the biggest shifts in mortgage lending in decades.
Norales explains how trended credit data and rental payment history can provide a more complete picture of borrowers, improving predictive accuracy while responsibly expanding credit access, particularly for first-time homebuyers. The conversation also explores the rental reporting gap, financial literacy and why credit modernization isn't just about better models, but better outcomes for borrowers, lenders and the housing market.
Related to the episode:
Zeb Lowe’s LinkedIn
https://www.linkedin.com/in/zebulon-lowe-a02353a4/
Devin Norales' LinkedIn
https://www.linkedin.com/in/devin-norales-amp-65a73577/
FICO® Score 10T
https://www.fico.com/en/ficoscore10
Want more from Zeb? Don’t forget to subscribe to LendingLife.
https://www.housingwire.com/newsletter/
The Power House podcast brings the biggest names in housing to answer hard-hitting questions about industry trends, operational and growth strategy, and leadership. Join HousingWire’s Zeb Lowe every Thursday morning for candid conversations with industry leaders to learn how they’re differentiating themselves from the competition. Hosted and produced by the HousingWire Content Studio.
On this episode of Power House, Zeb Lowe sits down with Devin Norales, Head of Mortgage and Capital Markets at FICO, to discuss the future of credit scoring and why represents one of the biggest shifts in mortgage lending in decades.
Norales explains how trended credit data and rental payment history can provide a more complete picture of borrowers, improving predictive accuracy while responsibly expanding credit access, particularly for first-time homebuyers. The conversation also explores the rental reporting gap, financial literacy and why credit modernization isn't just about better models, but better outcomes for borrowers, lenders and the housing market.
Related to the episode:
Zeb Lowe’s LinkedIn
https://www.linkedin.com/in/zebulon-lowe-a02353a4/
Devin Norales' LinkedIn
https://www.linkedin.com/in/devin-norales-amp-65a73577/
FICO® Score 10T
https://www.fico.com/en/ficoscore10
Want more from Zeb? Don’t forget to subscribe to LendingLife.
https://www.housingwire.com/newsletter/
The Power House podcast brings the biggest names in housing to answer hard-hitting questions about industry trends, operational and growth strategy, and leadership. Join HousingWire’s Zeb Lowe every Thursday morning for candid conversations with industry leaders to learn how they’re differentiating themselves from the competition. Hosted and produced by the HousingWire Content Studio.
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NewsTranscript
00:00Welcome to Powerhouse.
00:01There may be no four letters with more power over the American homeowner than FICO, FICO.
00:09That score decides who gets a loan, what it costs, and how it trades long after closing.
00:14And right now, the way that score works is changing.
00:17Today's guest is Devin Nerales, head of Mortgage and Capital Markets at FICO,
00:21with a background in the secondary market that has shaped how he sees credit.
00:26Today, we get into where FICO score 10T actually stands.
00:30What the lenders already pulling it are seeing, and why the data released in July
00:33moved this conversation from theory to results.
00:37Plus, the rental data gap almost nobody's talking about,
00:41and what credit modernization really means for the future of homeownership.
00:55Devin, thank you for joining me on today's sponsored episode.
00:58Thanks for having me.
00:59Excited to be here today.
01:01Yeah, excited to have you.
01:02So, you ready to get into it?
01:04Yeah, let's do it, man.
01:06Okay, all right, let's dive in.
01:08You spent years in the secondary market before coming to FICO,
01:11and I'd like to hear your description of the view from that side of the industry.
01:17You know, I think that there's a lot about the secondary market that the people who don't
01:22make, you know, the people that make the loans don't know.
01:26So, what do you see, or what did you see about the industry and about loans from that side
01:32of the fence?
01:33Yeah, no, that's a great question.
01:35I think one of the things that's a common theme in our space is that secondary marketing can
01:40be a bit intimidating, or, you know, some folks get a little confused and not really
01:46sure what all the acronyms mean, right?
01:50There are a lot of acronyms in our business and even more in the secondary space, but I
01:55think from our side of the perspective on, you know, being a secondary leader, we always
02:00really focused on, you know, what do the real numbers mean, right?
02:04And how does, you know, the boots on the ground, how can we provide them with the best
02:10options and the best products and the most liquidity going forward to allow them to help
02:15more and more borrowers?
02:16And so, from our standpoint, we always try to simplify it, right?
02:20We always try to think about what can we do to help our loan officers, but also help
02:26our borrowers.
02:27And so, from that standpoint, we made it as easy as possible to make sure we can communicate
02:32what we need to provide to the secondary market, but also what can we get from the consumer.
02:40So, you know, mortgage is unique.
02:41Decisions are made at origination and they ultimately flow through the secondary market,
02:46right?
02:46The score, you know, our score is being used by lenders, insurers, rating agencies, servicers.
02:52And so, it's used for risk assessment, but it's also used for valuation and execution.
02:57And so, from our side, I think that we really focus on, you know, people really focus on, you
03:04know, how can they, how can the secondary market improve their execution and their volume?
03:09And I think that, you know, good secondary market leaders really focus on that and try
03:13to do their best to provide as many options as possible for their sales teams.
03:19This is actually, and I think you mainly covered it, but I'm going to ask the follow-up question
03:25to that anyway.
03:26I got into the industry as an originator.
03:29I don't originate anymore, although I still keep my license.
03:33And, you know, being here at HousingWire, I'm much more plugged in, obviously, to the
03:38comings and goings, the news about the secondary market.
03:41But as an originator, as a practitioner, I just, like, after I closed the loan, other
03:45than, you know, following up for, you know, refi opportunities, you know, from a sales standpoint,
03:53like, after I closed the loan, it's like out of sight, out of mind, right?
03:55And so what would your, you know, the, at the highest level, why should an originator
04:00specifically, or even a lending executive, why should they care what happens to a loan
04:05after it leaves their hands?
04:07Oh, that's a great question, Zeb.
04:09And I'm glad you gave me that context that you were an originator.
04:12So I, you know, I can ease off of some of the things I was going to say.
04:15Um, no, I mean, I, I joke because, you know, I, in, in some of my previous roles, I would
04:21interact plenty with sales leaders and a lot of it was, you know, give and take, right?
04:26You know, what can, how can we help you?
04:29How can they help us?
04:30Things like that.
04:31But I think in terms of, you know, what happens post funding, I'm sure you had to deal with,
04:35you know, early payments.
04:36Uh, I'm sure you had to, you know, with where, you know, someone refi within a certain time
04:41period.
04:41And, you know, that's, there's things like clawbacks, right?
04:44Where you can claw back some of that cop.
04:46So I think it's very important that people understand what, you know, what happens post
04:51a ridge, because even from a servicing transfer standpoint, right?
04:55We know a lot of times that these, um, smaller originators will release that servicing and
05:01transfer that servicing to someone else.
05:02So quite frankly, those are originator customers, right?
05:05Like, and I would get plenty of calls where, you know, someone servicing was transferred and,
05:10uh, there was an issue with payment or there was an issue with getting that first payment
05:14in.
05:15Um, and they would come to me and say, Hey, what did you do?
05:18You sold our loan.
05:19You know, now my borrower is, is confused and, you know, they don't know who to make the
05:23right payment to, or they did make the payment, but it's not showing up on, you know, on their,
05:27uh, you know, on their transactions.
05:29And so, um, from that standpoint, I think it's, it's very important that people continue to
05:34understand what happens after closing, because, you know, if you put a bad taste in a borrower's
05:40mouth in terms of like, Hey, you know, we sold your servicing and now they're having issues,
05:44that's going to limit your ability to come back to them.
05:47And to your point, try to refi them or try to help them in, in, in a future situation.
05:51So having, having visibility and all that, I think is very crucial for, uh, for the, uh,
05:56sales community.
05:57One of the reasons that I was, uh, looking forward to, to having you on and speaking with
06:01you was the, to get your feedback and your perception on the, the topic.
06:07Well, I mean, modernization is really, that's, that's a term that's attached to basically every
06:13facet of the industry.
06:14I feel like over the last year or two, uh, but credit modernization is been, you know,
06:20that's been, there's been a lot of noise around that.
06:22And, um, I'd like to hear the, the, the status of the FICO score 10 T first of all, if
06:30you
06:30can just kind of unpack it at a very, at a very high level, what FICO score 10 T actually
06:35is, and then lead into where things are with the GSC and what adoption looks like right
06:42now.
06:43Yeah, no, absolutely.
06:44So, you know, I'll start because I feel like we've, we've been going through this credit
06:48modernization, uh, process for years now, right.
06:51But, um, FICO score 10 T was introduced in 2020 and it is FICO's most predictive and inclusive
06:57credit scoring model to date.
06:59You know, we integrate trended credit data and, you know, reflecting FICO's practice of
07:04continual innovation to address market and data enhancements.
07:08And that's, that's really at the core of what FICO score, um, you know, what FICO 10 T
07:12is, you know, we submitted FICO 10 T for consideration as part of the FHFA's credit score
07:18modernization, modernization effort in 2020.
07:21And the model was approved in late 22.
07:24So since that time, we've really been trying to focus on getting lenders to understand the
07:28differences, understand why having a more and improved credit score is better, not only
07:34for the consumer, but better for the industry as a whole, um, more specifically the GSEs
07:40have recently released expanded historical data sets for FICO score 10 T covering low
07:45level performance data from April, 2013 through September, 2025.
07:50And this data really enables lenders, investors, and housing finance stakeholders to evaluate
07:56the performance of 10 T.
07:57So I encourage folks to go and look at it, right?
07:59It's a lot of times I tell people, don't just trust us trust, but verify.
08:04And I think a lot of people, um, understand that that's the right way to go about it.
08:08And so, you know, what we've seen from the data since post data releases, you know, 10 T enables
08:14more accurate risk assessment while expanding opportunities for borrowers.
08:18And so what we've seen from the actual data and the lift and predictive lift that from 10
08:23T gives us a lot of confidence that 10 T is the right score for the industry to adopt.
08:29Yeah.
08:29I think that, I mean, you're, it's been adopted by, I want to say over 70 major lenders, I believe.
08:36So what's the, the, the feedback been from, uh, from those lenders that have adopted it?
08:42Yeah.
08:42Yeah.
08:43And I, and I want to, and I want to be very clear in terms of adoption, right?
08:46So when we're saying that 70 lenders are here, these are lenders who are actively evaluating
08:51FICO score 10 T and leveraging it where they can, right?
08:54We know that the big chunk of the business comes from, uh, comes from GSE production, which
09:00we're still, you know, there's still some steps that need to be had in order for full
09:03adoption with the GSEs.
09:05But outside of that, outside of that GSE production, there are a lot of opportunities
09:09for lenders to start leveraging the score, whether that's with VA, non-conforming, non-QM, you
09:15know, if you're a portfolio lender, that's portfolioing your production, you have the
09:19ability to use it now.
09:20Um, and so really what we've seen from lenders who have started to look at the, who have
09:25participated in the program and actually started looking at the data is they're actually seeing
09:29that if they were to be able, if they were able to leverage 10 T right away, they would
09:33be able to increase their approvals while keeping their risk constant.
09:37And that's something that we feel very confident that the industry will see overall.
09:41And we're, we're really excited about that.
09:43You know, VA lenders, we've been in a lot of, uh, discussions with them about how they
09:48can use 10 T to provide better pricing options to their customers.
09:53And so far the, the feedback we've gotten has been pretty good because if someone is coming
09:57in with a classic FICO score of 620, yeah, that might still allow them, you know, to technically
10:03do the loan, but you're an originator, you know, or you were an originator.
10:07You know, the discount points on that might be too much for a borrower to handle.
10:10So if you're able to get an additional credit score with 10 T and, you know, say they score
10:15660 and you can remove a half point, you know, three quarters of a point LLPA, that
10:21makes a real impact in terms of that borrower actually getting into the home and putting
10:25them in a mortgage that they can afford and sustain.
10:27And so that's something that we're really focused on making sure that anywhere you can
10:32use 10 T that we want you to start looking at it and finding out, um, how, how can that
10:37actually help your business and help more borrowers get into homes?
10:41Yeah.
10:42The, uh, back in July when the historical data was released, that was a big story at, uh,
10:48at housing wire.
10:48And I think it moved the conversation really more from intent to, uh, to outcomes.
10:53And so can you speak on what the numbers show about the, the predictiveness of the score
10:58and, and what the release of data, um, what that change in the conversation once that data
11:04was, was, was released, it was out there.
11:06For the last couple of years, you know, folks have been clamoring for our data and we've
11:10been clamoring to get it out.
11:12So we were very excited and we're very thankful that the GSEs went ahead and released this data.
11:17And I think what the data release did is it made it real to your point, right?
11:20This is now we know like, Hey, this is something that's moving forward.
11:24This is something that the industry looks, can look at and make their own assessments.
11:28Um, so far, what we've seen from the data, we're, we're pretty encouraged by some of the
11:32early independent analysis that's coming in.
11:35Most notably, highly respected actuary firm, Melman focused on FICO score 10 T and how it
11:40actually outperformed previous scores, uh, that being our classic model and vantage score
11:454.0, um, across every measure tested, um, and every vintage.
11:50And different borrower profiles.
11:52And one thing I want to say about that is, and I want to be clear is the metrics that
11:56Millman use are the same metrics that the GSE use when evaluating these credit score models.
12:01And I think that's very, very important, but we've seen a significant chaos, uh, lift
12:06specifically in the bottom decile.
12:08And we've even seen, um, improved predictive, predictive lift for first time home buyers.
12:13And that's one, I think the industry as a whole are really focused on getting more and
12:17more first time home buyers.
12:19And so, um, the separation that we've seen has been, um, up to double digits between
12:24the two, um, between the two scores and their actual predictive, uh, predictive lift when
12:28it comes to predicting a borrowed odds to, to repay.
12:32Yeah.
12:33And so, uh, you know, a big thing about this, right.
12:35What you're kind of speaking to is that his big picture, this is the, the, the score reflects
12:40more of how the borrower got to where they are now, um, than, than just a reflection of
12:46where they are.
12:47Right.
12:47It tells kind of, it tells a better, it tells a more accurate, a better story.
12:51Tenshi is more of a video, whereas classic is more of a picture.
12:54Right.
12:54Um, and then in this world, uh, you know, takey talkies and Instagram and all the stuff
13:00that people like, everyone knows video captures the attention of, of more folks.
13:05And so, uh, we really like to make sure that people understand that 10T does a much better
13:10job of seeing the entire picture using leveraging trend of data, leveraging rental data, um, better
13:17segmenting borrowers and allowing them to allowing us to score them to a more predictive score.
13:23Right.
13:24I always say people like to use their points, right.
13:26We're all, a lot of us are beholden to our credit card points.
13:28And so, you know, with classic, that was a really a snapshot in time.
13:32So if you're, say you were mid month and your utilization is, is high because, you know,
13:37you're throughout the month, but you pay it down every month.
13:40You know, that's something that classic wasn't, didn't do, um, as good of a job with 10T at
13:45picking up.
13:46When you start bringing in that trend of data, we can actually look and say, wow.
13:49Okay.
13:50Yes.
13:50Their utilization is high today, but over the last 24 months, this bar has actually paid
13:55off their balances monthly.
13:57And that's something that's actually a benefit.
13:59And that will help more people, um, get higher scores to allow them to get better pricing and,
14:04and get into the homes.
14:06Yeah.
14:06Okay.
14:07This goes to exactly what I really wanted to ask you is who, who does this help the most?
14:12I mean, is this designed to, to, to specifically help a particular type of borrower or is it
14:18like a rising tide lifts all boats?
14:20Everyone benefits under this, who scored differently under the, the 10T or is there anyone scored
14:26differently under the 10T than, uh, that stands out?
14:29Yeah.
14:30So I think, um, it's, it's helps everyone because at the end of the day, um, our score is inclusive.
14:35It's not like, we're not focused on picking one part of the industry or, or, you know,
14:40one type of borrower.
14:41Um, but we do see certain pockets like the first time home buyer pocket where we're able
14:46to better score thin files.
14:49So maybe someone who, you know, they only have a couple of trade lines and they only have
14:53a couple of years of history.
14:54Um, so those type of borrowers that are, you know, those FHA, those VA borrowers, um, where
14:59we see the most predictive lift and the most lifting approvals is actually around those
15:04government borrowers.
15:05So the FHA, VA, USDA guys, right.
15:08Um, because those are typically credit, you know, credit where, you know, they're maybe
15:13on the lower end of the spectrum.
15:14Uh, and so what 10T is able to do is actually predict their, uh, their, or actually model their
15:20score better and then provide that to, um, to the end investors.
15:25And so I, one thing I always say is it's not only about the borrowers, it's about the entire
15:29ecosystem and it's about the entire mortgage life cycle.
15:32And so 10T, yes, it does benefit the borrowers and helping lenders, but also benefits the investor
15:37community, right?
15:38The guys who are leveraging our scores to model out, uh, prepayment risk and default risk.
15:43And so, uh, we really think of 10T as something that's good, not just for the front end, but
15:48for the back end of, uh, of mortgage as well.
15:51So if, uh, you know, an LO listening and hear, you know, the term or the phrase, you know,
15:56like trended data, right.
15:57I think most, and began to me thinking from the, from the, from the perspective of an LO,
16:02of an LO, which you're more than, more than welcome to, to rip on, uh, I do it all the
16:06time.
16:06Uh, but like, you know, my first thought was like, how does this help me get loans out of
16:09the door any quicker or any more efficiently?
16:12Like, can you make that case?
16:13What does the, what does the 10T mean at the LO level or the lender level?
16:18And even going back to the capital market side where you originally came from?
16:23Yeah, no, I think, I think that's a great question.
16:25I think for an actual LO, you want every opportunity to help your borrower and to give your borrower
16:31the best, um, pricing that you can get them to get into a home.
16:35And so what 10T really does is it gives you another option.
16:38And I want to speak about our 10T for free program.
16:41And that's why I think what we're doing at FICO is really cool and really good for the industry,
16:45because I think we can all agree more data, the better, right?
16:49And so if you're a loan officer and you're already getting classic FICO, you're able to
16:54now see, Hey, what is their 10T score, right?
16:56What is classic missing?
16:58And what can I go to my team and my underwriting team and say, Hey, this is an actual, you
17:03know,
17:03better quality borrower.
17:05And 10T is picking that up.
17:06And what can we do to actually help them, um, help them get into home.
17:10So I think from, from an actual LO standpoint, you want to leverage 10T because we know, you
17:15know, rental data is included, right?
17:18We're better able to segment, um, authorized users.
17:21Uh, we're better able to segment, uh, medical collections.
17:25And, uh, we're also better able to look at, uh, medical, or sorry.
17:30Um, I hope, sorry, I'm drawing a blank here, but medical collections as well as debt collections.
17:36Right.
17:36And those are all things that impact the score.
17:39And so as a loan officer, you want to be able to have the best tool that can model that.
17:44And that tool is 10T.
17:45And so we feel very confident that if once borrowers and once lenders and loan officers start
17:51seeing both scores side by side, it'll be very clear that 10T is the score that'll help
17:56more people get into homes.
17:58I want to make sure that I, that I heard you correctly earlier at the beginning of your
18:01answer.
18:02It was 10T for free.
18:03Yes, yes, absolutely.
18:05So all those lenders you mentioned, the 70 lenders that, that, uh, that we've signed
18:09up, um, you know, that includes the likes of rate that includes the likes of CMG PRMG.
18:15Uh, we've got movement mortgage, fairway, a lot of the big lenders you guys already know.
18:21We have a significant chunk of the top 50 who are already active and able to start pulling
18:2510T.
18:25Um, a lot of those guys are, we feel very confident that as they continue to monitor
18:32and get 10T for free.
18:34So what that means is they get the classic score on their, you know, their regular print
18:38file, and then they get the 10T version in, uh, whatever way they want.
18:42So we have the ability or, and partnering with our reseller partners to deliver 10T, uh, in
18:49a suppressed manner.
18:50So you don't see it on the print file, or you can deliver it directly into your LOS.
18:54And so that's a really, really cool option because now you have all the data to allow
19:00you to make a better informed decision for, uh, for your borrowers.
19:04So as these 10T scored loans start filling pools, where does, uh, risk get priced differently
19:11or does it, and what should, uh, what should people be thinking about as they form these,
19:16uh, as they form these pools that maybe they weren't thinking about a year ago, maybe.
19:21That's, that's a great question.
19:22And that's one that, you know, my team is really, really focused on, um, not only the,
19:27the broker dealers, but the end investors or the aggregators, the guys that are buying
19:31these loans and making sure they understand a simple concept, uh, just because it's a
19:37three digit number, it does not mean that the scores are the same.
19:40Right.
19:40And so what we really try to get folks to understand is know the differences.
19:44What's driving the difference between a classic BICO versus a 10T versus our, you know, our
19:50competitor advantage and making sure you understand how those will impact the loans that you're
19:55buying.
19:56Um, and right now I'll tell you, it's, it's still pretty early days.
19:59Uh, we are seeing, um, more and more guys try to use, uh, newer, newer models when, when
20:07originating and then putting those out.
20:09But right now I think it's still pretty, pretty minimal.
20:12The feedback we've gotten is that there will be some sort of pricing spread between, um,
20:17between the models that, uh, that are used, but right now it's still too early.
20:21And I think a big thing we're still waiting for is a little bit more guidance from the GSEs
20:25in terms of how these LLPA grids will, will impact pricing.
20:29And I think once we get that, it'll be, there'll be a, even more distinction between, um, pricing
20:34and the, and the models that we see.
20:36But so far the investor community, you know, JP Morgan put out a piece, Bloomberg put out
20:41a piece, all saying that they see 10T as the most predictive score.
20:45And so, um, I think, you know, as well as I do, right.
20:48If, if there's, if there's less, um, if there's more certainty, you're going to get price
20:52better.
20:53And that's what we expect to see.
20:55You know, uh, one thing that I wanted to talk to you about, which I thought was usually
21:00in the, you know, in the mortgage industry, we're just, we tend to lag behind, uh, you
21:07know, the, the, the, the modernization talk is something that is, uh, it's been, it's been
21:13around for, for, for several years and, and obviously much needed, uh, we're just very much
21:18a, uh, a legacy industry as a, as a whole.
21:20And the, the, the, the, the, the conversation around rental data and, uh, and its use in
21:30scoring, I think is an inversion of what we normally see.
21:35Um, you know, the rental data has been, uh, our modern score, I think it was FICO nine,
21:42all the way to 10 T are built to read rental data, but only about 3% of, I believe
21:46it's
21:463% of renters have their payments reported to the bureaus.
21:50So it's like the, the infrastructures are like the scores are ready, but the data isn't
21:54there.
21:55Uh, like I said, which is like an inversion, I guess, of what, what normally happens.
21:59Uh, how did that happen and whose problem do you see it is to fix?
22:06That's a great question.
22:07When you ask me whose problem is it to fix?
22:11I think it's the industry as a whole and, and I totally agree with you, right?
22:15I think there are a lot of claims around a rental data is included and you know, it's
22:20going to help.
22:21But if we're talking sub 3% is actually reported, I think there's a lot of room to go for
22:26us
22:27to fix that.
22:27But I think it's more of a, it's more of an industry, uh, an industry wide obligation to
22:33try to fix this issue, right?
22:35Whether it's, you know, working with the bureaus to make sure that the data is reported correctly,
22:40um, creating standardized ways for renters to deliver.
22:43Um, I think right now the way it's structured is there's more incentive.
22:47Um, there's, there's not enough incentive for renters to want to, uh, to report this
22:54data and landlords to report this data, right?
22:56It costs money for a landlord to report the data, right?
22:59And now it's more money that they have to charge to a renter.
23:02And so, you know, I think those structural things need to be changed or need to be changed.
23:07But what I'll say is this isn't new for FICO, right?
23:10Just like you mentioned since 2014, all new versions of FICO have included reported rental
23:15data and these FICO scores have been used in hundreds and millions of credit related transactions.
23:21So, uh, while not all would be in mortgage, we have greater, you know, we have great adoption
23:26within the credit card and within the auto space as well.
23:29And so I think that we have to look at this as an industry wide issue of how do we,
23:36yes,
23:36everyone wants rental data, but how do we make it so that it's most effective for the entire
23:41industry so that it actually helps the consumers who are renting?
23:45Um, and I think that's a, that's, I don't have the answer or the, you know, the magic
23:50bullet to fix that.
23:51But I think if we put our heads together as an industry, it's one that, um, that we can
23:55tackle.
23:56Well, uh, you guys had a home ownership survey that you released in July and it stated that
24:02I think it was like something like 57% of renters.
24:04They, they don't know if their rental payment, uh, data is being reported, uh, to the credit
24:09bureaus by the landlord or property manager, or perhaps don't even, don't even believe
24:13that it is.
24:14So that could be, you know, that could be a potential borrower walking into an LO's office
24:18with the wrong assumption about their own credit.
24:21So how do you think lenders should handle that conversation?
24:25And is this something even worth pushing out to, to, to referral partners, for example?
24:31Yeah, no, that's, that's a great question.
24:33I think, you know, the thing is the bars are the center of everything we do, right?
24:37Whether it's us at FICO, whether it's an originator, whether it's an investor, you know, the bar
24:43at the borrower is the focus.
24:44So, you know, whether buying a home or getting a loan for their education or business, we
24:49realize that FICO scores play a big role in the journey of consumers.
24:53And so one thing we encourage is, you know, financial literacy and credit education.
24:57Um, that's huge.
24:58That's a huge focus for us.
25:00So we want every borrower to understand, Hey, I can go to myfico.com and get a FICO score
25:06for free to understand, you know, where, where, where am I?
25:10Where am I before I go into that loan officer's, um, you know, that loan officer's office, or,
25:14you know, we have tools like our FICO score mortgage simulator, um, is the only score simulator
25:19for mortgage professional that uses FICO scores and the actual FICO score algorithm.
25:25So having other tools using credit education, you know, financial literacy, those are all
25:30things that we encourage, not only borrowers to promote, but also the lenders who are working
25:36with these borrowers, because at the end of the day, that's, what's going to help everyone
25:39get into more homes.
25:41Yeah.
25:42You know, another, uh, part of the survey that I thought was interesting was the, uh,
25:48with the insights around home buyers and their obstacles, you know, financial obstacles,
25:54like, like, uh, high rates, high home prices, and more and more first time home buyers specifically,
26:00uh, delaying their, uh, their, their first time home purchase.
26:06And what's, I think what's, what's disturbing to me around this conversation is that the, the
26:13home is central to the American experience.
26:16Homeownership is tied to American culture in a way that is unique, more unique than any other
26:22country, than any other culture, um, in the world.
26:26And in a large part, that's because home ownership was basically guaranteed, like a near guaranteed
26:34part of the, uh, American experience for the last 50, 60, 70 years.
26:40And that, um, that assumption that, that belief that you are going to have a home is it's cracking
26:50for a lot of, uh, for a lot of Americans and, and, and the way that people view, as a
26:55result,
26:56the way that people view the home and home ownership is, is, is being altered.
27:00And from where you sit, how does credit modernization, what role does credit modernization
27:06actually play in turning around the, uh, the feelings towards home ownership or the possibility
27:13of home ownership?
27:13Because now, like I said, I just, I, from, from everything that I see kind of across the
27:17board, it's, um, people are, are, are far more, um, less believing in the, in the dream
27:27than they, and they have been in previous generations.
27:30No, I, it's, you know, it's funny you say that.
27:32Cause I was just having a conversation with a colleague of mine, um, a younger colleague
27:36of mine this week.
27:37And she, you know, she was mentioning, I don't know if I'll be able to afford a home.
27:40Um, and it breaks my heart because that's something that to your point, it's been a long, it's
27:45been a long part of the American dream.
27:47Um, you know, I'll, I'll tell a quick story.
27:49Uh, when I first got into this business, um, I have someone that I, you know, I've mentored
27:54for years and years.
27:55And one thing I encouraged her to do was buy a home as quickly as you can.
27:59Um, and this was back in, you know, maybe 2016, 2015.
28:03And, uh, to this day, she always tells me like, that was one of the best decisions I ever
28:07made.
28:07And she, you know, she said, thank you for, for encouraging me to do that because it has
28:12afforded her so much more, uh, so much more opportunity.
28:15And, and I think it's something that, you know, we, we have to focus on because if we
28:21can't get more people into homes, um, you know, that, that part of the American dreams
28:26become, becomes, you know, it goes further and further away.
28:29Um, obviously rates are a big part of that, right?
28:32Like the, the 10 year being where it is today is, um, it's, it's, it's tough, right?
28:37I look at that and I'm like, man, it must be hard, you know, digesting a 7% or a
28:42six
28:42and a half percent rate.
28:44Um, you know, I remember when, you know, back, you know, back in the day I was on the desk
28:48and, uh, we got to, you know, 5% or five and a quarter was our par rate.
28:52And we were like, oh my God, that's so high.
28:54And it's like today we've killed for five and a quarter, you know?
28:57And so, um, I think that that definitely plays a part of it, but I do think that educating
29:04borrowers on how to make sure that before you go into get a home that you understand your
29:10full financial picture.
29:11And I think that right there will help people understand what do they need to do to have
29:16the best opportunity to get into a home.
29:18But I think there are a lot of things that the industry has to figure out, right?
29:21Whether it's supply or there are enough homes for people, um, to actually purchase, right?
29:26That that's another big one, right?
29:27Or there, you know, the cost of origination is, is huge for lenders and how do they bring
29:32that down so that they can offer the best rate?
29:34So I don't think it's just one specific thing.
29:37I think credit, you know, FICO, we're just one part of the entire lending decision, but
29:42I do think that we have to come together as an industry to figure out what are the best
29:46ways to help more people.
29:48Um, and right now I think we have a lot of good people who are trying to do that, but
29:52I think the industry needs more and more, um, including people like us here at FICO to
29:57try to help.
29:58I've got one last, uh, last question for you.
30:01It's a big, uh, big picture question, not, no, no pressure, but if you're looking down
30:07the road, like, you know, the next five years and assuming, assuming an avenue of green
30:13lights, right, like the credit modernization delivers on, uh, on exactly what it's supposed
30:18to do, really a two part question.
30:20What, what does the housing market look like and what has to happen between now and then
30:25that isn't happening right now?
30:28Yeah, that's, you know, I think that, that is a, that is a big question.
30:32Um, you know, I, I'm, I'm a pretty optimistic guy, so I, I try to see things from, you know,
30:38my rose colored glasses, but, um, you know, in five years, FICO should be powering a more
30:44inclusive score, more dynamic credit market with 10T, right?
30:47We anticipate more adoption of 10T.
30:50We anticipate the GSEs using it.
30:52Um, and what we do, we believe the future of the market is more predictive, more inclusive
30:58and more data driven and the responsible innovation, transparency and long-term performance is, is
31:03really what matters most and something that we focus on here.
31:07You know, there's certainly a lot of noise in the market right now, but we believe the
31:11long-term fundamentals of predictive performance, trust and responsible innovation is going to
31:15win out.
31:16And so that's why we feel very confident in our score, but as an industry as a whole, I think
31:21we're heading in the right place, you know, we're heading in the right direction.
31:24I think, um, you know, what we're trying to do with this credit modernization act is continue
31:30what has been, you know, the, the benefits of the last, you know, let's call it 15, you
31:36know, 20 years since the, since the, um, the crisis of 08, right.
31:41Um, you have to continue to build, make sure the market is stable, right?
31:45We're dealing with all time low defaults right now.
31:47Um, and that's a good thing.
31:49And there's a reason we got there is because the system that's in place is working.
31:53And so I think with credit monetization, that's just going to continue to, you know, make those,
31:59you know, help those making the decisions to, to make even better decisions on, on how do
32:04we continue to one, keep defaults low, but also increase owner, um, home ownership access.
32:09And so, um, while our score is just one part of it, uh, we need implement, you know, implementation
32:15requires industry-wide alignment from all market participants.
32:19So that's one thing that I feel very good about that the industry is, is aware of that.
32:24And they're, they're working towards that, whether it's, you know, our partners at the
32:27MBA or, you know, whether it's our, um, you know, partners with our resellers or all the
32:32tech providers, ice, all these, all these guys, um, and all these different organizations
32:38are all working towards the same goal.
32:40And we just have to continue to, you know, make sure we're open and transparent with each
32:44other.
32:45All right, Devin, I thank you so much for coming on.
32:46Uh, it was a, I appreciate you taking the time.
32:49It was a pleasure speaking with you and learned a lot and, uh, look forward to another conversation
32:53with you soon.