WASHINGTON, D.C. - The federal government has announced a breakthrough in America's housing affordability crisis: rather than making homes cheaper or Americans wealthier, it will allow mortgage lenders to use a different number to determine whether people can afford them.
Fannie Mae and Freddie Mac are expanding the use of VantageScore as an alternative to FICO, giving lenders more flexibility in evaluating borrowers and potentially allowing them to select whichever scoring model produces a more favorable result.
"This is a historic achievement," said a housing policy adviser. "Yesterday, you couldn't afford a $600,000 house. Today, you still can't, but a different algorithm is much more supportive of your decision."
Officials emphasized that the initiative requires no reduction in home prices, no increase in wages, and absolutely no improvement in Americans' actual financial circumstances.
Mortgage investors have expressed concerns that more generous credit assessments could introduce additional lending risks, potentially raising borrowing costs.
The government welcomed those concerns as evidence that the housing market is finally becoming more accessible to people who cannot afford it.
"We've spent years trying to make housing affordable," the adviser explained. "It turns out we were asking the wrong question. Instead of 'Can you afford this mortgage?' we should have been asking 'Can we find a mathematical model that says you can?'"
Should borrowers eventually struggle to make payments, officials are reportedly considering a similar modernization of the definition of default.
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