Cardinal Financial Works with FICO to Offer First VA Mortgage-Backed Security Decisioned on FICO® Score 10 T
FICO partners with Cardinal Financial to integrate FICO® Score 10 T for non-conforming mortgage loans, aiming to increase VA loan production and help more veterans buy homes. The new scoring model promises greater precision, reduced default risk, and increased mortgage originations without added credit risk.
The integration of FICO Score 10 T by Cardinal Financial represents a strategic advancement in the mortgage lending industry. This move is likely to enhance Cardinal's risk assessment capabilities, allowing for more nuanced credit decisions. The adoption of a more predictive scoring model is essential for lenders in managing their portfolios effectively. By reducing default risk by up to 17%, Cardinal could see a significant improvement in loan performance, which may translate into lower provisions for credit losses and potentially higher profitability.
Furthermore, the potential increase in mortgage originations by up to 5% could contribute positively to Cardinal's market share and revenue growth. Investors should monitor Cardinal's future financial statements for evidence of these improvements in loan quality and business expansion. It's also worth noting that the mortgage industry is highly competitive and sensitive to interest rates, so Cardinal's ability to offer more competitive credit offers could be a differentiator.
Cardinal's initiative could have a ripple effect on the broader mortgage market, possibly setting a new standard for credit scoring. As other lenders observe the benefits reaped by Cardinal, such as improved risk management and increased loan production, they may also adopt FICO Score 10 T . This could lead to a shift in industry practices towards more advanced analytics and data utilization.
Moreover, the focus on serving veterans aligns with a growing trend of tailoring financial products to specific demographic groups. By becoming the first to issue a VA Mortgage-Backed Security using the new FICO model, Cardinal may gain reputational advantages and attract a loyal customer base among veterans, which is a significant niche market.
Cardinal Financial's adoption of FICO Score 10 T for VA loans could stimulate the housing market, particularly within the veteran community. By enabling more veterans to obtain mortgages, there is potential for increased demand in the housing sector, which can have a multiplier effect on the economy. Employment in construction, retail and other related sectors could see a boost as a result of heightened housing activity.
However, the long-term impact on the housing market will depend on broader economic factors, such as interest rates and housing supply. It is also important to consider that while increased access to credit can be beneficial, it must be balanced with responsible lending practices to prevent future default risks that could lead to negative economic consequences.
02/26/2024 - 08:00 AM
Mortgage Leader to Integrate FICO’s Most Predictive Score to Help More Veterans Buy Homes
BOZEMAN, Mont. --(BUSINESS WIRE)--
FICO , a leading analytics software firm, has announced that mortgage leader Cardinal Financial (Cardinal) is the latest in the movement to adopt FICO® Score 10 T for non-conforming mortgage loans. The lender is also the first to plan to issue a United States Department of Veterans Affairs (VA) Mortgage- Backed Security (MBS) using FICO’s newest and most predictive scoring model.
As part of this, Cardinal will integrate FICO® Score 10 T into its proprietary loan origination software, Octane®, to provide an enhanced valuation of the company’s portfolio. With the adoption of FICO Score 10 T, Cardinal can benefit from a more predictive and precise scoring model, to help enable the lender to increase its VA loan production and help more veterans buy a home.
“At Cardinal Financial, we're dedicated to redefining the home financing experience, placing a premium on simplicity and transparency. Our partnership with FICO to integrate the FICO Score 10 T into our operations underscores this commitment, particularly expanding our assistance to Veterans," said Joshua Mitzner, Executive Vice President of Capital Markets at Cardinal Financial. "With the integration of the latest FICO Score 10 T, we're poised to broaden our support, empowering a greater number of veterans and their families to realize their dream of homeownership.”
FICO® Score 10 T provides even greater precision in making lending decisions. FICO Score 10 T can help lenders better manage credit risk and default rates while extending competitive credit offers to consumers. FICO Score 10 T can enable an increase in mortgage originations of up to five percent (without taking on additional credit risk) and reduce default risk and losses by up to 17 percent. FICO® Score 10 T can also help lenders project cash flow more accurately.
“With the adoption of FICO® Score 10 T, Cardinal Financial is proactively enhancing its operations to better serve its customers by using the most predictive FICO Score model in the market today,” said Julie May, vice president and general manager of Scores at FICO. “FICO is thrilled to help enable Cardinal to continue to put its customers’ needs at the center of every financing decision.”
FICO is committed to assisting mortgage industry participants looking to transition to its most current model, FICO® Score 10 T. The FICO Score Migration Resource Center
About FICO
FICO (NYSE: FICO) powers decisions that help people and businesses around the world prosper. Founded in 1956, the company is a pioneer in the use of predictive analytics and data science to improve operational decisions. FICO holds more than 200 US and foreign patents on technologies that increase profitability, customer satisfaction and growth for businesses in financial services, insurance, telecommunications, health care, retail and many other industries. Using FICO solutions, businesses in more than 100 countries do everything from protecting 2.6 billion payment cards from fraud, to improving financial inclusion, to increasing supply chain resiliency. The FICO® Score, used by 90% of top US lenders, is the standard measure of consumer credit risk in the US and has been made available in over 40 other countries, improving risk management, credit access and transparency. Learn more at www.fico.com .
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About Cardinal Financial
Cardinal Financial is a dynamic, forward-thinking mortgage organization committed to designing an exceptional experience and tailored home financing solutions for borrowers. Licensed to sell directly through Fannie Mae, Freddie Mac, and Ginnie Mae, the firm operates in all 50 states, offering a wide range of lending options to help more people achieve homeownership. Cardinal Financial's innovative approach is powered by Octane®, their custom-built loan origination platform, designed to streamline the lending process from start to finish. Visit CardinalFinancial.com for more information.
View source version on businesswire.com: https://www.businesswire.com/news/home/20240226018264/en/
Julie Huang
press@fico.com
Source: FICO
What is FICO partnering with Cardinal Financial for?
FICO partners with Cardinal Financial to integrate FICO® Score 10 T for non-conforming mortgage loans.
How does FICO's new scoring model benefit Cardinal Financial?
FICO's new scoring model promises greater precision, reduced default risk, and increased mortgage originations for Cardinal Financial.
What percentage increase in mortgage originations can be achieved with FICO Score 10 T?
FICO Score 10 T can enable an increase in mortgage originations of up to five percent.
How much can default risk and losses be reduced by with FICO Score 10 T?
FICO Score 10 T can reduce default risk and losses by up to 17 percent.
What is the purpose of FICO Score Migration Resource Center?
The FICO Score Migration Resource Center provides a detailed guide to support organizations through their score transition with key planning steps and activities.
