Global leader in analytics software FICO announced Tuesday the launch of the first-ever government-issued mortgage-backed security (MBS) with loans sourced from FICO Score 10 T.
The MBS pool is issued by Cardinal Financial and included loans from the The U.S. Department of Veterans Affairs (VA). FICO Score 10 T uses lender trend data to understand lending behavior over time, allowing for more accurate risk assessments. Cardinal Financial’s pool began trading to a primary dealer on November 25.
“We are thrilled to see FICO form a 10T score at the heart of this landmark security,” Joe Zeibert, vice president of mortgage and capital markets at FICO, said in a statement. “By enabling smarter, more accurate lending decisions, FICO drives innovation that supports both financial institutions and the communities they serve. We encourage mortgage investors to consider the benefits of incorporating FICO Score 10 T into their models.”
According to FICO’s press release, the Montana-based company worked with the VA to confirm acceptance of FICO Score 10 T prior to the widespread transition required by the Federal Agency for Housing Financing (FHFA).
Cardinal claims to be one of the first lenders to adopt FICO 10 T for its non-conforming loans. In October, Cardinal began using the model to make VA loans. More than two dozen mortgage lenders nationwide have now implemented FICO 10 T for non-purchase loans Fannie Mae or Freddie Mac.
The credit model updates were announced in October 2022. In early 2023, the FHFA said it would aim to implement the FICO 10 T and VantageScore 4.0 updates in the fourth quarter of 2025.
North Carolina-based Cardinal Financial said the majority of its borrowers received higher credit scores through 10T, allowing the lender to obtain better loan terms without increasing credit risk.
“Today’s announcement underscores Cardinal’s role as a leader in rethinking the way we measure and manage credit risk,” Michael Gaines, senior vice president of capital markets at Cardinal Financial, said in a statement. “By leveraging the FICO Score 10 T, we are not only improving credit risk transparency for investors, but also expanding home ownership options for veteran and military borrowers.”
