- 12 hours 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.
Category
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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.
00:18Today's guest is Devin Nerales, head of mortgage and capital markets at FICO.
00:23With a background in the secondary market that shapes how he sees...
00:27Today's guest is...
00:28Today's guest is Devin Nerales, head of mortgage and capital markets at FICO.
00:33With a background in the secondary market that has shaped how he sees credit.
00:37Today, we get into where FICO score 10T actually stands, what the lenders already pulling it are seeing,
00:43and why the data released in July moved this conversation from theory to results.
00:49Plus, the rental data gap almost nobody's talking about,
00:52and what credit modernization really means for the future of homeownership.
01:07Devin, thank you for joining me on today's sponsored episode.
01:10Thanks for having me. Excited to be here today.
01:12Yeah, excited to have you. So, you ready to get into it?
01:16Yeah, let's do it, man.
01:18Okay, all right, let's dive in.
01:19You spent years in the secondary market before coming to FICO,
01:23and I'd like to hear your description of the view from that side of the industry.
01:29I think that there's a lot about the secondary market that the people who don't make,
01:34you know, the people that make the loans don't know.
01:37So, what do you see or what did you see about the industry, about loans from that side of the
01:43fence?
01:44Yeah, no, that's a great question.
01:46I think one of the things that's a common theme in our space is that secondary marketing can be a
01:52bit intimidating,
01:52or, you know, some folks get a little confused and not really sure what all the acronyms mean, right?
02:02There are a lot of acronyms in our business and even more in the secondary space.
02:06But I think from our side of the perspective on, you know, being a secondary leader,
02:11we always really focused on, you know, what do the real numbers mean, right?
02:16And how does, you know, the boots on the ground, how can we provide them with the best options
02:22and the best products and the most liquidity going forward to allow them to help more and more borrowers?
02:28And so, from our standpoint, we always tried to simplify it, right?
02:32We always tried to think about what can we do to help our loan officers, but also help our borrowers.
02:39And so, from that standpoint, we made it as easy as possible to make sure we can communicate
02:44what we need to provide to the secondary market, but also what can we get from the consumer.
02:51So, you know, mortgage is unique.
02:53Decisions are made at origination and they ultimately flow through the secondary market, right?
02:58The score, you know, our score is being used by lenders, insurers, rating agencies, servicers.
03:04And so, it's used for risk assessment, but it's also used for valuation and execution.
03:09And so, from our side, I think that we really focus on, you know, people really focus on,
03:15you know, how can they, how can the secondary market improve their execution and their volume?
03:21And I think that, you know, good secondary market leaders really focus on that and try to do their best
03:26to provide as many options as possible for their sales teams.
03:31This is actually, and I think you mainly covered it, but I'm going to ask the follow-up question to
03:37that anyway.
03:38I got into the industry as an originator.
03:41I don't originate anymore, although I still keep my license.
03:45And, you know, being here at HousingWire, I'm much more plugged in, obviously, to the comings and goings,
03:51the news about the secondary market.
03:52But as an originator, as a practitioner, I just, like, after I closed the loan, other than, you know,
03:58following up for, you know, refi opportunities, you know, from a sales standpoint,
04:04like, after I closed the loan, it's like out of sight, out of mind, right?
04:07And so what would your, you know, at the highest level, why should an originator specifically,
04:13or even a lending executive, why should they care what happens to a loan after it leaves their hands?
04:19Oh, that's a great question, Zev.
04:20And I'm glad you gave me that context that you were an originator, so I, you know,
04:24I can ease off of some of the things I was going to say.
04:28No, I mean, I joke because, you know, I, in some of my previous roles, I would interact plenty with
04:34sales leaders. And a lot of it was, you know, give and take, right? You know, what can, how can
04:39we
04:40help you? How can they help us? Things like that. But I think in terms of, you know, what happens
04:44post-funding, I'm sure you had to deal with, you know, early payments. I'm sure you had to, you know,
04:50with where, you know, someone refi within a certain time period. And, you know, that's,
04:54there's things like clawbacks, right, where you can claw back some of that cop. So I think it's
04:58very important that people understand what, you know, what happens post-orig, because even from
05:04a servicing transfer standpoint, right, we know a lot of times that these smaller originators will
05:11release that servicing and transfer that servicing to someone else. And quite frankly, those are
05:16originator customers, right? Like, and I would get plenty of calls where, you know, someone servicing
05:21was transferred and there was an issue with payment or there was an issue with getting that
05:26first payment in. And they would come to me and say, hey, what did you do? You sold our loan.
05:31You know, now my borrower is, is confused and, you know, they don't know who to make the right payment
05:35to, or they did make the payment, but it's not showing up on, you know, on their, you know,
05:40on their transactions. And so from that standpoint, I think it's, it's very important that people
05:45continue to understand what happens after closing, because, you know, if you put a bad taste in a
05:51borrower's mouth in terms of like, hey, you know, we sold your servicing and now they're having
05:56issues, that's going to limit your ability to come back to them. And to your point, try to refy them
06:00or try to help them in, in, in a future situation. So having, having visibility and all that, I think
06:05is very crucial for, uh, for the, uh, sales community.
06:08Well, one of the reasons that I was, uh, looking forward to, to having you on and speaking with
06:13you was the, to get your feedback and your perception on the, the topic. Well, I mean,
06:19modernization is really, that's, that's a term that's attached to basically every facet of the
06:25industry. I feel like over the last year or two, uh, but credit modernization is been, you know,
06:32that's been, there's been a lot of noise around that. And, um, I'd like to hear the, the,
06:38the status of the FICO score 10 T for, for, first of all, if you can just kind of unpack
06:42it a very, at a very high level, what FICO score 10 T actually is, and then lead into
06:49where things are with the GSC and what adoption looks like right now.
06:54Yeah, no, absolutely. So, you know, I'll start because I feel like we've been going through
07:00this credit modernization, uh, process for years. All right. But, um, FICO score 10 T was
07:05introduced in 2020 and it is FICO's most predictive and inclusive credit scoring model
07:10to date. You know, we integrate trying to credit data and, you know, reflecting FICO's practice of
07:16continual innovation to address market and data enhancements. And that's, that's really at the
07:21core of what FICO score, um, you know, what FICO 10 T is, you know, we submitted FICO 10 T
07:27for
07:27consideration as part of the FHFA's credit score monitor is a modernization effort in 2020.
07:33And the model was approved in late 22. So since that time, we've really been trying to focus on
07:38getting lenders to understand the differences, understand why having a more and improved credit
07:44score is better, not only for the consumer, but better for the industry as a whole. Um, more
07:50specifically the GSCs have recently released expanded historical data sets for FICO score 10 T
07:56covering loan level performance data from April, 2013 through September, 2025. And this data really
08:03enables lenders, investors, and housing finance stakeholders to evaluate the performance of 10 T.
08:09So I encourage folks to go and look at it, right? It's a lot of times I tell people don't
08:14just trust
08:14us trust, but verify. And I think a lot of people, um, understand that that's the right way to go
08:19about
08:19it. And so, you know, what we've seen from the data since post data releases, you know, 10 T enables
08:25more accurate risk risk assessment while expanding opportunities for borrowers. And so what we've
08:31seen from the actual data and the lift and predictive lift that from 10 T gives us a lot of
08:36confidence
08:37that 10 T is the right score for the industry to adopt. Yeah. I think that, I mean, you're, it's
08:43been
08:43adopted by, I want to say over 70 major lenders, I believe. So what's the, the, the feedback been
08:50from, uh, from those lenders that have adopted it? Yeah. Yeah. And I, and I want to, and I want
08:55to
08:56be very clear in terms of adoption, right? So when we're saying that 70 lenders are here, these are
09:01lenders who are actively evaluating FICO score 10 T and leveraging it where they can, right? We know
09:06that the big chunk of the business comes from, uh, comes from GSC production, which we're still,
09:12you know, there's still some steps that need to be had in order for full adoption with the GSCs.
09:17But outside of that, outside of that GSC production, there are a lot of opportunities
09:21for lenders to start leveraging the score, whether that's with VA, non-conforming, non-QM,
09:27you know, if you're a portfolio lender, that's portfolioing your production, you have the ability
09:31to use it now. Um, and so really what we've seen from lenders who have started to look at the,
09:36who have participated in the program and actually started looking at the data is they're actually seeing
09:41that if they were to be able, if they were able to leverage 10 T right away, they would be
09:45able to
09:45increase their approvals while keeping their risk constant. And that's something that we feel very
09:50confident that the industry will see overall. And we're, we're really excited about that.
09:55You know, VA lenders, we've been in a lot of, uh, discussions with them about how they can use 10
10:00T
10:01to provide better pricing options to their customers. And so far, the, the feedback we've gotten has been
10:07pretty good because if someone is coming in with a classic FICO score of six 20, yeah, that might
10:12still allow them, you know, to technically do the loan, but you're an originator, you know,
10:17or you were an originator, you know, the discount points on that might be too much for a borrower to
10:22handle. So if you're able to get an additional credit score with 10 T and, you know, say they score
10:26six 60 and you can remove a half point, you know, three quarters of a point LLPA that makes a
10:33real
10:33impact in terms of that borrower actually getting into the home and putting them in a mortgage that
10:37they can afford and sustain. And so that's something that we're really focused on making
10:42sure that anywhere you can use 10 T that we want you to start looking at it and finding out,
10:48um,
10:48how, how can that actually help your business and help more borrowers get into homes?
10:53Yeah. The, uh, back in July when the historical data was released, that was a big story at,
10:59at housing wire. And I think it moved the conversation really more from intent to,
11:03to outcomes. And so can you speak on what the numbers show about the, the predictiveness of
11:08the score and, and what the release of data, um, what that change in the conversation once that
11:16data was, was, was released, was out there. For the last couple of years, you know, folks have
11:20been clamoring for our data and we've been clamoring to get it out. So we were very excited and we're
11:25very thankful that the GSEs went ahead and released this data. And I think what the data release did is
11:30it
11:30made it real to your point, right? This is now we know like, Hey, this is something that's moving
11:35forward. This is something that the industry looks, can look at and make their own assessments. Um,
11:40so far, what we've seen from the data, we're, we're pretty encouraged by some of the early
11:44independent analysis that's coming in. Most notably, highly respected actuary for Melman focused on
11:50FICO score 10 T and how it actually outperformed previous scores, uh, that being our classic model
11:56and vantage score 4.0, um, across every measure tested, um, in every vintage and different borrower
12:02profiles. And one thing I want to say about that is, and I want to be clear is the metrics
12:07that
12:08Melman use are the same metrics that the GSE use when evaluating these credit score models. And I think
12:13that's very, very important, but we've seen a significant chaos, uh, lift specifically in the bottom
12:19decile and we've even seen, um, improve predictive, predictive lift or first time hold buyers. And
12:25that's one, I think the industry as a whole are really focused on getting more and more first time
12:30hold buyers. And so, um, the separation that we've seen has been, um, up to double digits between the
12:35two, um, between the two scores and their actual predictive, uh, predictive lift when it comes to
12:41predicting a borrowed odds to, to repay. Yeah. And so, uh, you know, a big thing about this,
12:47right. What you're kind of speaking to is that his big picture. This is the, the, the score reflects
12:51more of how the borrower got to where they are now, um, than, than just a reflection of where they
12:58are. Right. It tells kind of, it tells a better, it tells a more accurate, a better, better story.
13:02Tenshi is more of a video, whereas classic is more of a picture, right. Um, and then this world,
13:08uh, you know, ticky talkies and Instagram and all the stuff that people like, everyone knows
13:13video captures the attention of, of more folks. And so, uh, we really like to make sure that people
13:19understand that 10 T does a much better job of seeing the entire picture using leveraging trend
13:25of data, leveraging rental data, um, better segmenting borrowers and allowing them to,
13:32allowing us to score them to a more predictive score. Right. I always say people like to use their
13:37points, right. We're all, a lot of us are beholden to our credit card points. And so, you know,
13:41with classic, that was a really a snapshot in time. So if you're, say you were mid month and
13:46your utilization is, is high because, you know, you're throughout the month, but you pay it down
13:50every month, you know, that's something that classic wasn't, didn't do, um, as good of a job
13:56with 10 T at picking up. When you start bringing in that trend of data, we can actually look and
14:00say,
14:00wow, okay. Yes. Their utilization is high today, but over the last 24 months, this bar has actually
14:06paid off their balances monthly. And that's something that's actually a benefit. And that
14:11will help more people, um, get higher scores to allow them to get better pricing and get into
14:17the homes. Yeah. Okay. This goes to exactly what I really wanted to ask you is who, who does this
14:23help the most? I mean, is this designed to, to, to specifically help a particular type of borrower
14:29or is it like a rising tide lifts all boats? Everyone benefits under this, who scored differently
14:34under the, the 10 T or is there anyone scored differently under the 10 T than, uh, that stands
14:40out? Yeah. So I think, um, it's, it's helps everyone because at the end of the day, um, our
14:46score is inclusive. It's not like, we're not focused on picking one part of the industry or, or, you know,
14:51one type of borrower. Um, but we do see certain pockets like the first time home buyer pocket where
14:57we're able to better score thin files. So maybe someone who, you know, they only have a couple
15:03of trade lines and they only have a couple of years of history. Um, so those types of borrowers
15:08that are, you know, those FHA, those VA borrowers, um, where we see the most predictive lift or the
15:13most lifting approvals is actually around those government borrowers. So the FHA, VA, USDA guys,
15:19right. Um, because those are typically credit, you know, credit where, you know, they're maybe on the
15:25lower end of the spectrum. Uh, and so what 10 T is able to do is actually predict their, uh,
15:31their, or actually model their score better and then provide that to, um, to the end investors.
15:36And so I, one thing I always say is it's not only about the borrowers, it's about the entire
15:41ecosystem and it's about the entire mortgage life cycle. And so 10 T, yes, it does benefit the
15:46borrowers and helping lenders, but also benefits the investor community, right? The guys who are
15:50leveraging our scores to model out, uh, prepayment risk and default risk. And so, uh, we really think
15:57of 10 T as something that's good, not just for the front end, but for the back end of, uh,
16:02of mortgage
16:02as well. So if, uh, you know, an LO listening and hear, you know, the term or the phrase, you
16:07know,
16:07like trended data, right. I think most, and again, me thinking from the, from the, from the perspective
16:13of an LO, of an LO, which you're more than, more than welcome to, to rip on. Uh, I do
16:17it all the time.
16:18Uh, but like, you know, my first, I'll say, how does this help me get loans out of the door
16:21any quicker or any more efficiently? Like, can you make that case? What does the, what does the 10 T
16:27mean at the LO level or the Lendl lender level, and even going back to the capital market side,
16:32where you originally came from? Yeah, no, I think, I think that's a great question. I think for
16:37an actual LO, you want every opportunity to help your borrower and to give your borrower the best,
16:43um, pricing that you can get them to get into a home. And so what 10 T really does is
16:49it gives
16:49you another option. And I want to speak about our 10 T for free program. And that's why I think
16:54what we're doing at FICO is really cool and really good for the industry, because
16:58I think we can all agree more data, the better. Right. And so if you're a loan officer and you're
17:03already getting classic FICO, you're able to now see, Hey, what is their 10 T score? Right. What is
17:08classic missing? And what can I go to my team and my underwriting team and say, Hey,
17:13this is an actual, you know, better quality borrower and 10 T is picking that up. And what
17:18can we do to actually help them, um, help them get into home? So I think from, from an actual
17:23LO
17:24standpoint, you want to leverage 10 T because we know, you know, rental data is included, right?
17:29We're better able to segment, um, authorized users. Uh, we're better able to segment, uh,
17:35uh, medical collections. And, uh, we're also better able to look at, uh, or sorry. Um,
17:43I hope, sorry, I'm drawing a blank here, but medical collections as well as debt collections.
17:47Right. And those are all things that impact the score. And so as a loan officer, you want
17:53to be able to have the best tool that can model that. And that tool is 10 T. And so
17:57we feel
17:58very confident that if once borrowers and once lenders and loan officers start seeing both
18:03scores side by side, it'll be very clear that 10 T is the score that'll help more people get into
18:09homes. I want to make sure, uh, that I, that I heard you correctly earlier at the beginning of
18:13your answer. It was 10 T for free. Yes, yes, absolutely. So all those lenders you mentioned,
18:18the 70 lenders that, uh, that we've signed up, um, you know, that includes the likes of rate that
18:24includes the likes of CMG, PRMG. Uh, we've got movement mortgage, fairway, a lot of the big
18:31lenders you guys already know. We have a significant chunk of the top 50 who are already active and able
18:36to start pulling 10 T. Um, a lot of those guys are, we feel very confident that as they continue
18:43to monitor and get 10 T for free. So what that means is they get the classic score on their,
18:49you
18:49know, their regular print file, and then they get the 10 T version in, uh, whatever way they want.
18:54So we have the ability or partnering with our reseller partners to deliver 10 T, uh, in a
19:01suppressed manner. So you don't see it on the print file, or you could deliver it directly into
19:04your LOS. And so that's a really, really cool option because now you have all the data to allow
19:11you to make a better informed decision for, uh, for your barbers. So as these 10 T scored loans start
19:18filling pools, where does, uh, risk get priced differently or does it, and what should, uh,
19:25what should people be thinking about as they form these, uh, as they form these pools that maybe they
19:30weren't thinking about a year ago, maybe. That's, that's a great question. And that's one that,
19:35you know, my team is really, really focused on, um, not only the, the broker dealers, but the end
19:41investors or the aggregators, the guys that are buying these loans and making sure they understand
19:45a simple concept of just because it's a three digit number, it does not mean that the scores are the
19:51same. Right. And so what we really try to get folks to understand is know the differences, what's
19:57driving the difference between a classic BICO versus a 10 T versus our, you know, our competitor
20:02advantage and making sure you understand how those will impact the loans that you're buying. Um, and
20:08right now I'll tell you, it's, it's still pretty early days. Uh, we are seeing, um, more and more guys
20:14try to use, uh, newer, newer models when, when originating and then putting those out. But right
20:21now, I think it's still pretty, pretty minimal. The feedback we've gotten is that there will be
20:26some sort of pricing spread between, um, between the models that, uh, that are used, but right now
20:32it's still too early. And I think a big thing we're still waiting for is a little bit more guidance
20:36from the GSEs in terms of how these LLPA grids will, will impact pricing. And I think once we get
20:42that it'll be, there'll be a, even more distinction between, um, pricing and the, and the models
20:47that we see, but so far the investor community, you know, JP Morgan put out a piece, Bloomberg
20:52put out a piece all saying that they see 10 T as the most predictive score. And so, um,
20:57I think, you know, as well as I do, right. If, if there's, if there's less, um, if there's
21:02more certainty, you're going to get priced better. And that's what we expect to see.
21:06Yeah. Uh, one thing that I wanted to talk to you about, which I thought was
21:11usually in the, you know, in the mortgage industry, we're just, we tend to lag behind,
21:19uh, you know, the, the, the, the modernization talk is something that is, uh, it's been, it's
21:24been around for, for, for several years and, and obviously much needed, uh, we're just very
21:29much, uh, a legacy industry as a, as a whole. And the, the, the, the conversation around rental
21:38data and, uh, and its use in scoring, I think is an inversion of what we normally see.
21:46Um, you know, the rental data has been, uh, our modern score, I think it was FICO 9, all
21:53the way to 10 T are built to read rental data, but only about 3% of, I believe it's
21:583% of,
21:58uh, renters have their payments reported to the bureaus. So it's like the, the infrastructures
22:03are like the scores are ready, but the data isn't there. Uh, like I said, which is like an inversion,
22:09I guess, of what, what, what normally happens. Uh, how did that happen and whose problem do
22:15you see it is to fix? That's a great question. When you ask me whose problem is it to fix?
22:23I think it's the industry as a whole. And, and I totally agree with you, right? I think
22:27there are a lot of claims around, Hey, rental data is included and you know, it's going to help. But
22:33if we're talking sub 3% is actually reported, I think there's a lot of room to go for us
22:38to fix that.
22:39But I think it's more of a, it's more of an industry, uh, an industry wide obligation to
22:45try to fix this issue, right? Whether it's, you know, working with the bureaus to make sure that
22:49the data is reported correctly, um, creating standardized ways for renters to deliver.
22:55Um, I think right now the way it's structured is there's more incentive. Um, there's, there's not
23:01enough incentive for renters to want to, uh, to report this data and landlords to report this data,
23:08right? It costs money for a landlord to report the data, right? And that's more money that they
23:12have to charge to a renter. And so, you know, I think those structural things need to be changed
23:17or need to be changed. But what I'll say is this isn't new for FICO, right? Just like you mentioned,
23:23since 2014, all new versions of FICO have included reported rental data. And these FICO scores have been
23:29used in hundreds and millions of credit related transactions. So, uh, while not all would be in
23:35mortgage, we have great, uh, you know, we have great adoption within the credit card and within
23:40the auto space as well. And so I think that we have to look at this as an industry wide
23:46issue of
23:47how do we, yes, everyone wants rental data, but how do we make it so that it's most effective for
23:52the entire industry? So that actually helps the consumers who are renting. Um, and I think that's,
23:58uh, that's, I don't have the answer or the, you know, the magic bullet to fix that,
24:02but I think if we put our heads together as an industry, it's one that, um, that we can tackle.
24:07Well, uh, you guys had a home ownership survey that you released in July and it stated that,
24:13I think it was like something like 57% of renters. They, they don't know if their rental payment data
24:19is being reported to the credit bureaus by the landlord or property manager, or perhaps don't even,
24:24don't even believe that it is. So that could be, you know, that could be a potential borrower walking into
24:29an LO's office with the wrong assumption about their own credit. So how do you think lenders
24:35should handle that conversation? And is this something even worth pushing out to, to, to
24:41referral partners, for example? Yeah, no, that's, that's a great question. I think,
24:46you know, the thing is the bars is the center of everything we do, right? Whether it's us at FICO,
24:51whether it's an originator, whether it's an investor, you know, the bar, the borrower is the focus.
24:56So, you know, whether buying a home or getting a loan for their education or business, we realize
25:01that FICO scores play a big role in the journey of consumers. And so one thing we encourage is,
25:07you know, financial literacy and credit education. That's huge. That's a huge focus for us. So we
25:12want every borrower to understand, Hey, I can go to myfico.com and get a FICO score for free to
25:19understand, you know, where, where, where am I? Where am I before I go into that loan officer's,
25:24um, you know, that loan officer's office, or, you know, we have tools like our FICO score mortgage
25:28simulator, um, is the only score simulator for mortgage professional that uses FICO scores
25:34and the actual FICO score algorithm. So having other tools using credit education, you know,
25:40financial literacy, those are all things that we encourage not only borrowers to promote,
25:46but also the lenders who are working with these borrowers, because at the end of the day,
25:49that's, what's going to help everyone get into more homes. Yeah. You know, another, uh,
25:55part of the survey that I thought was interesting was the, uh, with the insights around home buyers
26:02and their obstacles, you know, financial obstacles, like, like, uh, high rates, high home prices,
26:09and more and more first time home buyers specifically, uh, delaying their, uh, their,
26:15their first time home purchase. And what's, I think what's, what's disturbing to me around this
26:22conversation is that the, the home is central to the American experience. Home ownership is tied to
26:30American culture in a way that is unique, more unique than any other country and any other culture,
26:36um, in the world. And in a large part, that's because home ownership was, you know, like,
26:44basically guaranteed, like a near guaranteed part of the, uh, American experience for the last 50,
26:5060, 70 years. And that, um, that assumption, that, that belief that you are going to have a home
26:59is it's cracking for a lot of, uh, for a lot of Americans. And, and, and the way that people
27:06view,
27:07as a result, the way that people view the home and home ownership is, is, is being altered.
27:12And from where you sit, how does credit modernization, what role does credit modernization
27:17actually play in turning around the, uh, the feelings towards home ownership or the possibility
27:24of home ownership? Because now, like I said, I just, I, from, from everything that I see kind of
27:29across the board, it's, um, people are, are, are far more, um, less believing in the, in the dream
27:39than they, and they have been in previous generations. No, I it's, you know, it's funny
27:43you say that. Cause I was just having a conversation with a colleague of mine, um, a younger colleague
27:47of mine this week. And she, you know, she was mentioning, I don't know if I'll be able to afford
27:51a home. Um, it breaks my heart because that's something that to your point, it's been a long,
27:57it's been a long part of the American dream. Um, you know, I'll, I'll tell a quick story.
28:01Uh, when I first got into this business, um, I have someone that I, you know, I've mentored for
28:06years and years. And one thing I encouraged her to do was buy a home as quickly as you can.
28:11Um,
28:11and this was back in, you know, maybe 2016, 2015. And, uh, to this day, she always tells me like,
28:17that was one of the best decisions I ever made. And she, you know, she said, thank you for,
28:21for encouraging me to do that because it has afforded her so much more, uh, so much more
28:26opportunity. And, and I think it's something that, you know, we, we have to focus on because
28:32if we can't get more people into homes, um, you know, that, that part of the American dreams become,
28:38becomes, you know, it goes further and further away. Um, obviously rates are a big part of that,
28:44right? Like the, the 10 year being where it is today is, um, it's, it's, it's tough, right? I look
28:49at
28:50that and I'm like, man, it must be hard, you know, digesting a 7% or a six and a
28:54half percent rate.
28:56Um, you know, I remember one, you know, back, you know, back in the day I was on a desk
29:00and,
29:00uh, we got to, you know, 5% or five and a quarter was our par rate. And we were
29:04like,
29:05oh my God, that's so high. And it's like today we've killed for five and a quarter.
29:09And so, um, I think that that definitely plays a part of it, but I, I do think that educating
29:16borrowers
29:16on how to make sure that before you go into get a home that you understand your full financial
29:22picture. And I think that right there will help people understand what do they need to do to have
29:27the best opportunity to get into a home. But I think there are a lot of things that the industry
29:32has to figure out, right? Whether it's supply or there are enough homes for people, um, to actually
29:36purchase, right? That that's another big one, right? Or they're, you know, the cost of origination is,
29:42is huge for lenders and how do they bring that down so that they can offer the best rates?
29:46So I don't think it's just one specific thing. I think credit, you know, FICO, we're just one
29:51part of the entire lending decision, but I do think that we have to come together as an industry to
29:57figure out what are the best ways to help more people. Um, and right now I think we have a
30:02lot
30:02of good people who are trying to do that, but I think the industry needs more and more, um,
30:06including people like us here at FICO to, to try to help.
30:10I got one last, uh, last question for you. It's a big, uh, big picture question, not no,
30:16no pressure, but if you're looking down the road, like, you know, the next five years and
30:23assuming, assuming an avenue of green lights, right? Like the credit modernization delivers on,
30:28uh, on exactly what it's supposed to do really two part question. What, what does the housing market
30:33look like and what has to happen between now and then that isn't happening right now?
30:40Yeah, that's, you know, I think that, that is a, that is a big question. Um, you know, I, I'm
30:46a pretty
30:46optimistic guy, so I, I try to see things from, you know, my rose colored glasses, but, um, you know,
30:52in five years, FICO should be powering a more inclusive score, more dynamic credit market with
30:5810T, right? We anticipate more adoption of 10T. We anticipate the GSEs using it. Um, and what we do,
31:06we believe the future of the market is more predictive, more inclusive and more data driven
31:10and the responsible innovation, transparency and long-term performance is, is really what matters
31:16most and something that we focus on here. You know, there's certainly a lot of noise in the market right
31:21now, but we believe the long-term fundamentals of predictive performance, trust and responsible
31:26innovation is going to win out. And so that's why we feel very confident in our score, but as an
31:31industry as a whole, I think we're heading in the right place. You know, we're heading in the right
31:35direction. I think, um, you know, what we're trying to do with this credit modernization act is
31:42continue what has been, you know, the, the benefits of the last, you know, let's call it 15,
31:47you know, 20 years since the, since the, um, the, the crisis of 08. Right. Um, you have to continue
31:54to build, make sure the market is stable, right? We're dealing with all time low defaults right now.
31:59Um, and that's a good thing. And there's a reason we got there is because the system that's in place
32:04is working. And so I think with credit modernization, that's just going to continue to, you know, make
32:09those, you know, help those making the decisions to, to make even better decisions on, on how do we
32:16continue to one keep defaults low, but also increase owner, um, home ownership access.
32:21And so, um, while our score is just one part of it, uh, we need implement, you know, implementation
32:26requires industry-wide alignment and all market participants. So that's one thing that I, I feel
32:32very good about that the industry is, is aware of that. And they're, they're working towards that,
32:37whether it's, you know, our partners at the MBA or, you know, whether it's our, um, you know,
32:41partners with our resellers or all the tech providers, all these, all these guys, um, and
32:48all these different organizations are all working towards the same goal. And we just have to continue
32:53to, you know, make sure we're open and transparent with each other. All right, Devin. Thank you so
32:57much for coming on. Uh, it was a, I appreciate you taking the time. It was a pleasure speaking with
33:01you and learned a lot and, uh, look forward to another conversation with you soon.
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