In an important move designed to increase access to home ownership, i Federal Home Loan Bank of New York (FHLBNY) announced the adoption of an alternative credit scoring model to increase the availability of home credit.
The wholesale bank will now allow members to secure a mortgage through VantageScore 4.0 system. FHLBNY will partner with 330 lenders across New York, New Jersey, Puerto Rico and the US Virgin Islands to reach 3.1 million prospective borrowers through innovative credit solutions.
Credit scores from VantageScore 4.0 provide lenders with a unique data score – including rental payment history – to assess a borrower’s creditworthiness. Traditional scoring models that primarily consider credit history, credit and income ratios and other factors can limit the unqualified home buyer.
With the merger, FHLBNY joins its peers in Federal Home Loan Bank of Chicago as well as Federal Home Loan Bank of San Francisco in efforts to reduce the home ownership gap due to race, which has widened in recent years, with more credit opportunities for underserved borrowers.
The FHLBNY’s decision to add VantageScore 4.0 follows a push from Democratic Reps. Ritchie Torres and Gregory Meeks, who in August formally petitioned the FHLBNY to accept the loan guarantee and see inclusive data. Torres describes the FHLBNY initiative as the first layer of an important foundation for wealth creation in the US
“Federal Home Loan Bank of New York’s decision to recognize a Vantage Score of 4.0 lays an important foundation for the creation of basic wealth in America,” Torres said in a statement. “I have voters who have paid their rent in full and on time for decades, yet none of their rental history is considered for credit scoring.”
Meeks echoes Torres’ statement, highlighting his own background and the important role a homemaker played in his upbringing.
“My family’s experience is personal testimony to the value of home ownership. “By enabling the use of VantageScore 4.0 credit scores, Federal Home Loan Bank of New York is expanding opportunities and ensuring that people who have been left out will be able to start their home ownership journey,” said Meeks.
The announcement comes as Democratic lawmakers fight for affordable housing solutions. Torres recently introduced the Accelerated Production Housing Act (ASAP Housing Act) which aims to improve the supply of affordable housing. During that time, Meeks introduced several bills — including the American Dream Down Payment Act — to help start-up and underserved groups.
The FHLBNY’s affordable housing efforts may continue to grow next year, as the bank has secured more than $100 million in public funding for homeownership programs by 2024.
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