- 4 months ago
On today’s episode, Editor in Chief Sarah Wheeler talks with Tim Bowler, president of ICE Mortgage Technology, about Vantage 4.0 and what the availability of that new credit score means for lenders.
Related to this episode:
ICE Mortgage Technology
https://mortgagetech.ice.com/index
Timothy Bowler | LinkedIn
https://www.linkedin.com/in/timothy-bowler-2abb81365
HousingWire | YouTube
https://www.youtube.com/channel/UCXDD_3y3LvU60vac7eki-6Q
Enjoy the episode!
The HousingWire Daily podcast brings the full picture of the most compelling stories in the housing market reported across HousingWire. Each morning, listen to editor in chief Sarah Wheeler talk to leading industry voices and get a deeper look behind the scenes of the top mortgage and real estate stories. Hosted and produced by the HousingWire Content Studio.
Related to this episode:
ICE Mortgage Technology
https://mortgagetech.ice.com/index
Timothy Bowler | LinkedIn
https://www.linkedin.com/in/timothy-bowler-2abb81365
HousingWire | YouTube
https://www.youtube.com/channel/UCXDD_3y3LvU60vac7eki-6Q
Enjoy the episode!
The HousingWire Daily podcast brings the full picture of the most compelling stories in the housing market reported across HousingWire. Each morning, listen to editor in chief Sarah Wheeler talk to leading industry voices and get a deeper look behind the scenes of the top mortgage and real estate stories. Hosted and produced by the HousingWire Content Studio.
Category
🗞
NewsTranscript
00:00welcome everyone my guest for this sponsored episode is Tim bowler president of ice mortgage
00:12technology to talk about vantage 4.0 and what the availability of that new credit score means
00:18for lenders Tim welcome back to the podcast Sarah it is great to be here thank you for hosting me
00:25and I'm very excited about today's topic yeah me too vantage score 4.0 I feel like this is
00:31what the industry has been talking about it's a pretty big change yeah it's it's a I mean it's a
00:37very large and meaningful change um for all um all stakeholders in the system it's going to have
00:43meaningful benefits for a lot of first-time home buyers it's got meaningful benefits for lenders
00:47as they they have choice I think it's going to provide more information for those in the capital
00:53markets as they evaluate underlying mortgage-backed securities so I think it's you know a real good
00:58change um for the industry the ecosystem that uh that we serve and it's going to be very beneficial
01:04uh net net um over the long haul well let's get into some of the details from your perspective
01:11how is vantage score 4.0 different from previously used credit scores sure well there's a couple
01:17things you know first and foremost um it's different relative to the classic scoring models
01:22that have been used uh because it's a different provider um it uses trended data which can use
01:28a longer time period of data and also within the context of the vantage score and how it's calculated
01:34where rental data or utility data is available that gets leveraged in order to help build an underlying
01:39potential borrowers credit file which uh hopefully and ideally can uh lead to greater access to credit
01:46because as your audience knows that thin credit file can be tough to overcome at first with that
01:51when trying to buy that uh initial home but having more access to data having better access to data
01:57over long time periods can be extremely extremely beneficial I think that's really interesting
02:02because we know like this is um we want to expand sustainable home ownership right so we want to
02:08include more people in that that rental data though has been difficult to um sort of get into the process
02:15um before this change right like that that rental data might be being collected but what do you do with
02:20that how does the lender really see it yeah and I you know I think um this goes back to uh the key
02:28actors in the system that the enterprises who are the investors um those that are doing credit scoring
02:34you know are very much focused on trying to help that first-time home buyer that might have a thin file
02:40and so therefore certainly with what um the team advantage has done and open themselves up to be able to take
02:45uh uh utility data open themselves up to be able to take rental data to help that first-time home buyer
02:53create a credit file you know at the get-go it's just extremely beneficial also for that matter just
02:58understanding you know can that household that potential home buyer have they been able to manage
03:03rental payments well have they been able to manage utility payments well that provides a good signal to
03:09the lender that you know this um potential home buyer or this uh uh this couple that's a potential home buyer
03:15is ready to take the leap into home ownership i think that's a really great point and you know just to narrow
03:20in on the lenders because you talked about you know this this is a game changer for people you know throughout
03:26the mortgage life cycle but let's talk about the lender specifically you know what should they think like
03:31what does this mean for them so two things you know first and foremost i think it's going to potentially
03:37expand the universe of folks that are credit worthy once it's fully incorporated into our system so
03:41that's a good thing um sarah as you know as your audience knows it is a tough environment right now
03:46to be a first-time home buyer um rates are high home prices you know continue to on to be high so
03:52making certain that those that are prepared and ready to buy a home don't face barriers within the
03:57context of a you know thin credit file i think this is a good you know step in the right direction in that regard
04:03secondly for the lenders listening uh to your to this podcast they use us for their loan origination
04:10system i want them to be confident that we're going to be ready to adopt the new vantage score
04:15the vantage 4.0 score into our ecosystem as soon as as soon as all the standards are published
04:21and put out by the two enterprises obviously there's some open questions that are in the market today
04:26the enterprises know these questions they're formulating their plan
04:30in consultation uh with fhfa the regulator uh and we're engaged uh within discussions with both fhfa
04:37and the enterprises to make sure that we're ready to move as fast as possible as soon as those
04:43guidelines and standards are put out i think it's a great point because you know something new in the
04:48mortgage industry that that could be really beneficial it's exciting but it's also we know i mean the
04:54mortgage industry can be you know any change can be a little bit uh people can have trepidation
04:59around that so let's talk about how i specifically is helping lenders prepare for integrating vantage
05:05score into their workflows which is really where the rubber meets you know where the rubber hits the road
05:10that's right and as you know in in our industry we manufacture loans there's a process of being able to
05:14collect data creating a mortgage file perfecting that file using it to fund the loan and then to
05:20ultimately sell that to that loan to an end investor and or get that insured depending on the liquidity
05:28and the liquidity venue of choice so for us you know what we've done as a team our engineering team and
05:33our product teams and our coverage teams we really identified each point in the manufacturing life
05:38cycle that that credit score manifests itself making certain that we're prepared to be able to make the
05:44underlying process changes that technology changes the documentation changes that might be necessary
05:50within the context of whatever guidance that gets put out by fannie mae and freddie mac as they adopt um
05:56as they adopt the vantage 4.0 score into their underwriting guidelines it's also important for us to be able to
06:03anticipate how investors are going to look at the underlying loans to incorporate the score so we've been thinking through that
06:09a fair amount as a team making sure that we're doing the right things to be able to make that loan that we're
06:13manufacturing more sellable in a more transparent way once those guidelines and standards are put in
06:19place by the enterprises that's really interesting so maybe talk a little bit more who do you collaborate
06:24with to ensure there's alignment there's you know that this is a smooth process well it's multifaceted
06:29you know first and foremost all roads lead to the two enterprises because ultimately we're going to need
06:34to understand what their standards are going to be what their guidelines are going to be what their rule
06:38books are going to be within the context of manufacturing a loan to their specifications
06:43such that lenders and couple space lenders can sell that loan efficiently to fannie mae and freddie mac
06:49we're also doing that in collaboration as we engage with the regulator fhfa and make certain that
06:54we're understanding kind of where the regulator's mindset is on this such that we're delivering the
06:58ultimate goals that that were supposed by director pulte when he announced the incorporation of
07:03the vantage four point of score at the ecosystem or the um the desire to get that into the mortgage
07:09lending ecosystem the second bucket is lenders we're talking to our lenders who are out there
07:15making loans every day we're out there manufacturing mortgages every day we're understanding about how
07:19they use the classic scores today how they that's incorporated into their lending process how they're
07:24anticipating incorporating the vantage score into their processes either at the top of the funnel when
07:29they're engaging with uh with households or through the underwriting process or through the the underlying
07:35uh sourcing of liquidity when they sell those loans to make certain that we understand how they're
07:40thinking about it put providing feedback to them as we get feedback as appropriate from the enterprises
07:46and the regulatory community amplifying those conversations and then ultimately making it you know
07:52trying to find a way to make it easier for them to adopt this once the new standards are put in place
07:57and then lastly just within the context of our data businesses and our engagement with uh investors
08:04and also structuring our loans to make them more sellable we're trying to anticipate where uh investors
08:09you know would want to see the scores manifest themselves how they'd want to be displayed
08:14and how that could work in the broader ecosystem to make certain that there aren't any liquidity issues
08:20um as soon as the new vantage score is incorporated into the underwriting practices
08:23on the or the purchase practices of fannie mae and freddie mac so it really is trying to think about each
08:29part of the ecosystem to make sure that we're prepared to serve those stakeholders once the guidelines are set
08:35to me this sort of integration is like the perfect example of the expertise that ice has when it comes to
08:42these kind of changes like this is not your first rodeo and you have you know a lot of um experience going okay
08:49what are the things we need to think about that maybe nobody else is thinking about that's right
08:53and that you know just in preparation of you know this morning i was thinking about the podcast that
08:57we're going to have i was trying to think of an analogy of um uh that i might raise with your group
09:04and i was thinking very much almost like a sporting team analogy you know we we know um we got to play
09:09the game we don't know exactly what the you know the conditions are going to be for that game so we're
09:13going to prepare and get trained for any bit uh any potential outcome such that you know when it uh
09:19when it comes time to play that game we're ready to go um and can execute to the best of our ability
09:25that's what we're doing here within the context of the uh being able to adopt the vantage 4.0 score
09:31once guidelines are set we're still waiting for the final guidance to come out from the two enterprises
09:35and their regulators or anticipating you know how that might unfold and making certain that we're ready
09:41to be able to adopt those changes to be able to adopt that guidance as fast as possible to make
09:46it as easy as possible for the lenders that we serve and then for the broader ecosystem that
09:51leverages encompass and the files we may help our lenders manufacture once those underlying loans
09:59feed into securities so i think that you know vander's score a credit score in general it's one way to look
10:06at as you were talking about you know for the lenders to really see what is the financial
10:11health of this of these applicants how do we really score that how do we really you know take
10:17that into account that's one way what are some other ways that i specifically is helping lenders
10:22assess the ability to repay well that's a great question because it's very timely within the context
10:28of you know partnership we just announced with freddie mac how we're integrating our underwriting
10:34tools our automated underwriting tools through our data and document automation suite
10:38in our analyzer suite into their uh into the aim income check profile that's leveraged and feeds into
10:44lpa and what we've done there is through a full integration between ourselves and freddie mac we're
10:50able to take borrowers that are leveraging pay stubs and leveraging w-2s and help our lenders underwrite
10:56those files much more seamlessly and efficiently and quickly get that information fed to freddie mac
11:02um as soon as possible and then to have freddie mac be able to respond back to that lender through the
11:08encompass ecosystem that the income has been validated and that there's not the lender is not
11:13going to face and warrant risk around how income calculations are done all that in a seamless manner
11:18and in a timely manner that can cut out a lot of inefficiencies in the underwriting process and that's
11:23beneficial for multitude of reasons you know first and foremost you know within the context of the current
11:29environment you're obviously going to be able to do underwriting much more efficiently particularly
11:32for those borrowers or hopefully as we transition into a refinancing environment in which volume will
11:38go up dramatically and you'll start to see more borrowers uh with much greater velocity that are w-2
11:44borrowers or um pay stub borrowers come to your in your system as the refinancing activity occurs it
11:50allows you to scale your underwriters much more dramatically without necessarily having to go out and hire
11:54more underwriters to meet demand that might manifest itself in it uh and a large volume of underwriting
12:01uh that's associated with refinancing i think certainty is huge right what you just talked about
12:07huge if people if lenders can know like um faster easier like yes this is and scalable like scalable going
12:16back to the uh the example i just talked about like in a refund nobody knows when a refinancing wave hits
12:22it just does you know rates tend to drop and they tend to drop pretty fast and then all of a sudden
12:27you're engaging with your households and they want to refinance and they want to refinance as fast as
12:31possible to start saving you got to scale your underwriters in those environments so giving them
12:36the tools to do so is paramount to us while contemporaneously making certain that you're doing
12:41that in a safe and sound reliable fashion and that's where the integration to freddie mac and through lpa
12:47through our what we've done with our analyzer suite and aim is so valuable to that lender community
12:53i think especially in this environment you know anybody who listens to this podcast on a regular
12:57basis um you know when i have our lead analyst logan modashamian we often go listen this could change
13:03before the end of this podcast so just you know keep that in mind that's exactly i mean the one thing i've
13:09learned in my you know 30 years my 30 year professional career is don't ever try to predict rates
13:14um and so you just have to be prepared and that goes back to you know really the theme of this
13:19whole conversation is how ice you know ice helps our lenders be prepared whether it's a structural
13:24change within the context of how we're all going to incorporate the vantage 4.0 score into the system
13:30or whether it's a market change that might manifest itself by a you know quick drop in rates that
13:35creates a massive refinancing opportunity you know for us at intercontinental change in partnership with our
13:40our our lender community it's all about being prepared and helping them be prepared to act quickly
13:45when an opportunity manifests itself great points um you know that kind of leads into my next question
13:51which is um you know ice is really when you think about mortgage technology what do you think about
13:56you think about the technical part you think about the regulatory compliance but you know tell me how
14:01you're helping strengthen borrower relationships which i think is really something that people don't think
14:06about like that that's something that you would look to mortgage technology to do well that uh it's
14:11a great question you know in its multi-faceted you know first and foremost speed that you know if
14:18i'll just go harken back to the refinancing example what do you want to do with a borrower that wants to
14:23refinance you want to get that loan close as soon as possible so they can start saving um as quickly as
14:29possible and so that's getting them through the underwriting process and getting them through the closing
14:33process um as fast as fast as can and that also um amplifies and ties into you know our digital
14:41closing solution set that we have now within the context of being able to meet borrowers where they're
14:45at to be able to close digitally to be able to do e-closes to be able to do e-notes to be able to you know
14:51leverage digital technology as opposed to analog technology in order to close ones to make that uh to
14:57make that faster secondly you know pivoting back to a purchase market um in the current environment
15:04you know it's helping that first time home buyer it's helping them structure their loan it's helping
15:08them be able to get that uh data sets fed into that um to that lender in a way that's structured and
15:14organized so that lender can make the best possible decision around how to provide liquidity and what
15:20type of liquidity source that um that borrower should leverage whether it be um that first time home
15:25buyer whether that be an fha loan a ba loan or that be conventional execution with um with mortgage
15:31insurance you know it's us it's providing the digital tools to be able to help guide that lo to
15:37be able to help guide that lender when they engage with the household be able to get information from
15:42that household to get them underwritten in a way that's you know customer centric efficient and able to
15:49be um uh operationalized by that borrower to the time and place that suits them whether that be in
15:56the morning whether it be if they have access in the afternoon or late at the evening when they're
15:59finally um helping you pull together your loan file we want to be able to help our lenders meet from those
16:05borrowers you know at the time that's right for them i love that tim thank you so much for being on i
16:10can i can hear the passion coming through and just the fact that you are so excited about where we are in
16:16this market and and how ice can help lenders yeah and sarah you know i'd just like to make one last
16:20point to your audience um you know circling back to the um you know the core um core part of our
16:26conversation today as they have questions about like the incorporation of the vantage 4.0 score
16:31i can't encourage them enough to reach out to their contacts here at ice that can give them more
16:35detailed information on how we're engaging with one um the broader stakeholder set as part of this
16:40process and how we'll be ready to help them when the time is right to incorporate the vantage 4.0 score
16:46so you know telling your audience don't be shy reach out to us we look forward to engaging with
16:50them do it get information you get that's what you guys are there for thank you again for being on
16:56love talking to you as always sarah was an absolute pleasure thank you so much
Be the first to comment