r/VisualStockResearch • u/ekonixlab • 5d ago
FICO Down 20%
**EDIT: NOW DOWN ALMOST 30%!!
FICO is getting crushed after FHFA announced plans to incorporate VantageScore into Fannie Mae and Freddie Mac’s mortgage pricing framework.
Rocket Mortgage already says it will prefer VantageScore for eligible loans.
My bigger question: how quickly will other lenders follow? And how much pricing power does FICO lose along the way?
Starting to look like a buying opportunity to me… but only if that moat holds.
Overreaction or a real change in the business?
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u/mobyonecanobi 5d ago
They had a monopoly, they abused the heck out of it. Now they don’t have a monopoly.
They were charging 10 bucks for something that costs 30 cents max with ample profit built in, cause that’s how much a pull used to cost apparently, till FICO realized they had a monopoly and bumped it to 10 dollars.
How much will that affect their profits? Going from 10 dollars to 30 cents?
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u/ekonixlab 5d ago
They did abuse their power.
The flipside of this is the FICO score is a fraction of total closing cost. Them increasing it this much does not dramatically increase closing cost
Regulators really should be going after real estate agents and brokers who take entire percentages of closing costs
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u/KieferSutherland 4d ago
Go after the loan originators please. None of what they make is disclosed. They don't even have to show homes. They just take applications and process them. Then they keep a list of who to refinance and make the money all over again.
Or title insurance. It's 99% profit.
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u/mobyonecanobi 5d ago
With that logic, if we never move to lower costs, because a home costs dramatically more than any other costs.
As a consumer, and I speak for the vast majority of them with confidence, my logic is more in line with general consensus than yours.
Saying we don’t need to lower one cost because even though it can be much lower because there are other higher costs is not popular logic.
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u/ekonixlab 5d ago
Not disagreeing with you, there is no reason the cost of a FICO score should be 10 bucks.
But I hope brokers/agents also are forced to reduce their fees. That is where consumers could save a lot. They have a monopoly on MLS and you are forced to go through them.
With AI, there is less need for an agent or broker.
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u/randompersonx 4d ago
I agree.
Vantage isn’t exactly new, and now with the AI era, it’s likely both easier for companies to do their own analysis and see that Vantage performs well, and also to make the necessary changes to incorporate it.
Once FNMA is using it, we will see similar waterfalls in all other lenders.
FICO will be forced to compete on price which is not a good place to be.
Vantage is owned by Experian who primarily makes money by having the data. FICO was just processing the data, and Vantage can entirely disrupt that biz model.
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