FHLBank Chicago Now Accepts Mortgage Collateral Using VantageScore 4.0 to Increase Opportunities for Underserved Borrowers and Close the Homeownership Gap

Expanded Mortgage Collateral Option Gives Member Financial Institutions Additional Resource to Originate Loans to More Diverse and Creditworthy Homebuyers

CHICAGO--(BUSINESS WIRE)--The Federal Home Loan Bank of Chicago (FHLBank Chicago) and VantageScore announced today that member financial institutions can now pledge mortgage collateral using VantageScore credit scores as an alternative to the classic FICO credit score model. By considering rental payments and other consumer credit data in its scoring algorithms that are not included in traditional scoring models, VantageScore provides an innovative solution aimed at expanding access to support sustainable homeownership.

“FHLBank Chicago products and practices work to bridge the gap to homeownership for borrowers in our members’ communities across Illinois and Wisconsin,” said Michael Ericson, President and CEO, FHLBank Chicago. “I am proud of our partnership with VantageScore and the progress we are making to drive financial inclusion and equitable access to mortgage lending in our district.”

The expansion of eligible one to four family residential mortgage collateral that can be pledged by member financial institutions to the FHLBank Chicago promotes mortgage lending to creditworthy homebuyers who have historically been left out of conventional credit models. VantageScore estimates that using their credit model will result in approximately 33 million more consumers nationwide having access to a credit score that may aid them in obtaining a mortgage; this includes an estimated 2.4 million consumers within the FHLBank Chicago’s district of Illinois and Wisconsin.

“We are pleased to be a part of the FHLBank Chicago’s efforts to address housing affordability and better serve their members,” said Anthony Hutchinson, SVP of Industry and Government Relations, VantageScore. “VantageScore’s innovative credit-score models score more people, which makes a significant impact in addressing the potential disparities that exist in mortgage lending. Working with FHLBank Chicago, we can help reduce the homeownership gap in America.”

Today’s announcement continues FHLBank Chicago’s multi-year commitment to promote homeownership and increase affordable housing supply. In 2024, FHLBank Chicago increased the maximum per member limit available for its Downpayment Plus^® (DPP^®) grant program, a downpayment assistance program, to $1 million per member; increased the maximum grant per project to $2 million through its Affordable Housing Program (AHP) General Fund, forgivable grants that subsidize the acquisition, new construction, and rehabilitation of affordable rental or owner-occupied housing; and committed additional funding to the Community First^® Housing Counseling Resource Program to provide access to financial education through Illinois and Wisconsin housing agencies. FHLBank Chicago also offers Community Advances at below market rates to help members fund affordable housing and economic development needs in their communities, and more than $237 million was funded in first quarter 2024.

About the Federal Home Loan Bank of Chicago

FHLBank Chicago is a regional bank in the Federal Home Loan Bank System. FHLBanks are government-sponsored enterprises created by Congress to ensure access to low-cost funding for their member financial institutions, with a focus on providing solutions that support the housing and community development needs of members’ customers. FHLBank Chicago is a self-capitalizing cooperative, owned by its Illinois and Wisconsin members, including commercial banks, credit unions, insurance companies, savings institutions and community development financial institutions. To learn more about FHLBank Chicago, please visit fhlbc.com.

About VantageScore^®

VantageScore is the fastest-growing credit scoring company in the U.S., and is known for the industry’s most innovative, predictive, and inclusive credit score models. In 2023, usage of VantageScore increased by 42% to more than 27 billion credit scores. More than 3,400 institutions, including 8 of the top 10 banks, use VantageScore credit scores to provide consumer credit products including credit cards, auto loans, personal loans and mortgages. The VantageScore 4.0 credit scoring model scores 33 million more people than traditional models. With the FHFA mandating the use of VantageScore 4.0 for Fannie Mae and Freddie Mac guaranteed mortgages, the company is also ushering in a new era for mortgage lending and helping to close the homeownership gap.

VantageScore is an independently managed joint venture company and owners include the three Nationwide Consumer Reporting Agencies (NCRAs) – Equifax, Experian, and TransUnion.