FICO stock fell sharply after Bill Pulte, director of the Federal Housing Finance Agency, announced Monday that Fannie Mae and Freddie Mac will consolidate mortgage pricing to a single grid that includes both FICO Classic and VantageScore 4.0.
In pre-market trading, FICO shares dropped over 20%, erasing more than $3 billion in market value. By mid-morning, the decline had extended to approximately 30%, with total market cap loss exceeding $4 billion.
Changes to Mortgage Pricing
Previously, Fannie Mae and Freddie Mac maintained separate pricing grids for FICO and VantageScore, with VantageScore priced approximately 20 points lower. The new arrangement places both scoring systems on the same grid, allowing lenders to use either without premium adjustments.
VantageScore 4.0, developed by Equifax, Experian, and TransUnion, gained access to the government-sponsored enterprises on September 9. Under the revised pricing structure, lenders can now generate conforming mortgage applications without purchasing FICO scores.
Industry Response
Rocket Mortgage announced it will default to VantageScore 4.0 instead of FICO scores on eligible direct-to-consumer loans starting in the fourth quarter. The company claimed average savings of $1,600 at closing for applicants using VantageScore 4.0.
Broader Market Impact
FICO stock has declined 46% since the beginning of September. The company's shares hit an all-time high of $2,402 in November 2024 and now trade below $610, representing a 75% decline from that peak. Over the past month alone, FICO has lost more than $12 billion in market capitalization.
