The Credit Scoring Site
A bleak account

Fannie Mae credit score chart
Tweedledum's mortgage loan-level pricing matrix based on FICO credit scores, March 6, 2008

1997 - "Have you heard of variable, ah, pricing based on credit scoring?"

2000 - "Fannie Mae: 'You might have heard that the next version of Fannie Mae's system - due next month - will no longer rely on the FICO credit score...'"

Fannie Mae decree 08-04

On March 6, 2008, Fannie Mae ("we are in the American Dream business") commanded that the conventional loan pricing scheme is now based on two 72-box matrices.

In its lender Announcement 08-04, New Flow Business Pricing Requirements, the government-sponsored enterprise wrote, "In light of the continued deterioration in housing market conditions, including declining home prices and increasing delinquencies and losses, Fannie Mae will modify its pricing to better align with loan risk characteristics." In November, 2007, Fannie Mae floated a simpler (8-box) scheme in its Announcement 07-16.

Taking a cue from the late subprime loan industry, Fannie puts borrowers into well-defined classes based on equity and FICO credit score, two of the three (4, or 5) Cs of credit.

The gold standard is 740, the top FICO score tier in Fannie's bracket racket. At the bottom of the heap, in the 620 and below cell, the price is 2.75 points (2.75% of the loan amount) for a no-money down (100% loan-to-value ratio) purchase, and 3% for a cash-out refinance at 90% LTV.

When it rains it pours

On February 27, the Office of Federal Housing Enterprise Oversight (OFHEO) stated, "Fannie Mae published its timely, audited financial statement for 2007 today and Freddie Mac anticipates publishing its statement tomorrow. These steps constitute an important milestone in remediation of their respective operational and control weaknesses that led to multi-year periods when neither company released timely, audited financial statements."

On March 3, after subpoenas and investigations, Fannie agreed with the New York Attorney General to major new mortgage loan appraisal standards.

On March 11, the Federal Reserve (aka "Helicopter Ben") announced a $200-billion "expansion of its securities lending program." "Fannie spokeswoman Marilyn Kornfeld declined to comment" reported AP.

Future announcements

The new pricing chart does not apply to some Fannie Mae products such as MyCommunityMortgage (the company's concession to America to stay in business). But in a coda, the big kahuna warns, "In conjunction with DU Version 7.0, Fannie Mae expects to better align and integrate requirements for products such as MyCommunityMortgage... " Key code word: align. Stay tuned.

Fannie Mae. And Fannie may not. Only Fannie knows. It's a very private company.

Monkey Do

Tweedle Dee's almost identical thing from March 13. Thank your lucky stars we have Freddie Mac to keep Fannie Mae in check to avoid corruption and all that.


April, 1997: "Information on how to obtain one's credit score is suspiciously absent from your site. How do I get mine?"

"And we're not running a game show. I mean, we're evaluating risk. We're not trying to have people get--achieve the highest score."

"Fisher is a fan of going by the book and then beyond it."

"He beat the scoring proponents to the punch by scooping up the web address, from which he launches often strident, sometimes wacky, but usually well-documented attacks on the credit-scoring concept and the industries that support it."

Realty Consumers Empowered By Online "Peoples" Court - "His Web site helped him-- and millions of other consumers-- extend fair credit reporting rights to credit scoring information."

"Fisher operates the Web site, which skewers the secrecy of the credit bureaus and Fair, Isaac." - The Detroit News is an exceptionally-interesting site that offers news and information regarding credit scoring and-- really-- the entire credit process."