Cardinal Financial issues first mortgage-backed security using FICO 10 T

by Sarah Wolak

Global analytics software leader FICO on Tuesday announced the launch of the first-ever government-issued mortgage-backed security (MBS) with loans originated using FICO Score 10 T.

The MBS pool was issued by Cardinal Financial and included loans from the U.S. Department of Veterans Affairs (VA). FICO Score 10 T utilizes trended data for lender use in understanding credit behavior over time, which enables more accurate risk assessments. Cardinal Financial’s pool was traded to a primary dealer on Nov. 25.

“We are thrilled to see FICO Score 10 T at the heart of this milestone security,” Joe Zeibert, vice president of mortgage and capital Markets at FICO, said in a statement. “By helping to enable smarter, more precise lending decisions, FICO is driving innovation that supports both financial institutions and the communities they serve. We encourage mortgage investors to consider the advantages of incorporating FICO Score 10 T into their models.”

Per FICO’s press release, the Montana-based company collaborated with the VA to confirm acceptance of FICO Score 10 T ahead of the widespread transition as required by the Federal Housing Finance Agency (FHFA).

Cardinal claims to be one of the first lenders to adopt FICO 10 T for its nonconforming loans. In October, Cardinal started using the model to originate VA loans. More than 20 mortgage lenders nationwide have now adopted FICO 10 T for loans that aren’t purchased by 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 that the majority of its borrowers received higher credit scores through 10 T, allowing the lender to acquire better loan terms without any credit risk increases.

“Today’s announcement underscores Cardinal’s role as a leader in rethinking how we measure and manage credit risk,” Michael Gaines, senior vice president of capital markets at Cardinal Financial, said in a statement. “By leveraging FICO Score 10 T, we’re not only improving credit risk transparency for investors but also expanding homeownership opportunities for veteran and military borrowers.”