by Houtan Hormozian | Sep 5, 2025 | CRESTICO, Mortgage
For decades, getting a mortgage meant meeting the standards of one primary credit scoring system: FICO. It was the undisputed benchmark for the entire industry. But that’s all changing. In a landmark decision that will redefine the path to homeownership in 2025 and beyond, a powerful new option has just been approved.
The Federal Housing Finance Agency (FHFA) has sent a shockwave through the Real Estate world by approving VantageScore 4.0 as a valid credit scoring model for all loans backed by Fannie Mae and Freddie Mac.
This isn’t just a minor policy update; it’s a revolutionary shift that opens up competition and promises to unlock the dream of homeownership for millions. At Crestico, we are on the front lines of this change, and here’s what you need to know about how this will reshape the Los Angeles and Southern California housing market.
What’s the Big Deal? A New Choice in Credit Scoring
For years, the traditional FICO model has been the main gatekeeper. It heavily relies on a long history of specific credit types, like credit cards, auto loans, and previous mortgages. If you didn’t fit that specific profile, you were often overlooked, regardless of your actual financial responsibility.
VantageScore 4.0 breaks that rigid mold. Its advanced model is designed to see a bigger financial picture by including alternative data.
- Rent & Utility Payments: Have you paid your rent and utilities on time for years? VantageScore can now use that history to build your credit profile, something traditionally ignored. 👏
- Thin Credit Files: Don’t have multiple credit cards or a long loan history? VantageScore is better at scoring consumers with “thin” credit files, giving a more accurate picture of their creditworthiness.
- Inclusivity: This model is designed to be more inclusive of gig workers, young buyers, and new Americans who may not have a traditional credit footprint but are financially reliable.
This shift means your responsible financial habits—like paying your rent on time—can finally help you qualify for a home loan.
A Flood of New Buyers: Who Wins in This New Era?
This change is expected to be a game-changer for several groups who have been unfairly sidelined by the housing market. We anticipate a surge of new, qualified buyers entering the market, including:
- Responsible Renters: Millions of Californians who have been paying sky-high rent on time can now leverage that payment history to their advantage.
- The Gig Economy Workforce: For the countless freelancers, contractors, and entrepreneurs in Los Angeles, this new model offers a fairer evaluation of their financial stability.
- Young & First-Time Home Buyers: Younger generations who are more likely to have thin credit files but are otherwise financially savvy now have a clearer path to securing a mortgage.
According to industry estimates, this single policy change could allow up to 5 million new buyers to enter the U.S. housing market. For a competitive market like Southern California, this infusion of qualified buyers is monumental.
Market Impact: What This Means for LA Sellers and Investors
This news isn’t just for buyers. The ripple effects will be felt across the entire real estate ecosystem. 📈
- For Sellers: A larger pool of qualified buyers means more demand for your property. This can lead to more competitive offers, less time on the market, and a stronger negotiating position. Your home is now accessible to a brand-new segment of the population.
- For Investors, Flippers, and Wholesalers: The “exit strategy” just got a massive boost. With millions of new retail buyers entering the market, flippers will have a broader audience to sell their renovated properties to. Wholesalers can expect to move contracts faster as the number of potential end-buyers skyrockets.
How Crestico Can Be Your Guide in This New Landscape
A changing market creates incredible opportunities, but it can also be confusing. As a forward-thinking real estate and Mortgage Brokerage, Crestico is already ahead of the curve. Our team is working closely with lenders who are early adopters of the VantageScore 4.0 model.
- For Aspiring Home Buyers: Did you think homeownership was out of reach? It’s time to find out for sure. We can help you understand your VantageScore, connect you with the right lenders, and see if you now qualify for your dream home.
- For Savvy Sellers: The market is about to get even hotter. Let us help you position your property to attract this new wave of buyers and maximize your return on investment.
This is more than a new rule—it’s a new era of access and affordability in real estate. Don’t navigate it alone.
Contact the experts at Crestico today. Let’s explore what this historic change means for you.
by David Glenn | May 20, 2017 | CRESTICO
Investing in real estate can be one of the most exhilarating things an investor does. There is a thrill that comes with finding a good deal, improving a home and, making a killing off of the sale. Most real estate investors don’t start out that way, however. In fact, many, if not most, real estate investors will tell you that they have made many mistakes and lost quite a bit of money as well. They will also tell you it was worth it because of the lessons learned that could be utilized later down the line.
Here are a few mistakes real estate investors typically make in the beginning. Avoiding them can save a lot of heartache.
Hard money
Hard money loans can be an incredible tool. If you have not heard of hard money loans, they are quick loans that are based on the value of the asset (the home, or piece of real estate) instead of the person getting the loan. This means someone with bad credit good get a hard money loan, as long as it is a good deal and the house is worth a lot more, or has a lot of potential.
Hard money loans are usually less than a year, and are just used to snag a quick deal, maybe fix things up, then sell or convert to a regular loan. They have incredibly high Interest Rates – often as high as fifteen percent.
Because of the high interest rates, investors usually hold hard money loans for as little time as possible. If a mistake is made and they end up holding the loan significantly longer than expected, the interest expenses can rack up and put them in a miserable place. If they hold past the original time of the loan, things can get really ugly.
Simply put, if you are going to use a hard money lender, be careful, have exit strategies and backup exit strategies to be sure you are not stuck holding the bag.
Signals
Most good investors are able to use signals and see when the signs point to selling and when they point to buying. If you are able to recognize these signals then you are able to capitalize much quicker and make money much faster.
Research
If you think you are getting a good deal on a piece of property then it is time to be careful. There is often a reason a piece of property is priced the way it is. While good deals do exist, bad deals disguised as good deals also exist.
Research the neighborhood, the history of the home, the future of the area, rental prices, the real estate market as a whole, and everything else you can think of. If everything checks out, you can feel confident in the deal you are getting.
Understand expenses
Your mortgage will absolutely not be your only expense. There will be random expense all along the way. Try to have an emergency fund for when something big comes up. New investors are often surprised to realize how much some home repairs can cost. One recommendation that some investors will give is a home warranty. A home warranty is a warranty that gives you the ability to insure almost everything in your home that can break. From water heaters, stoves, microwaves, refrigerators, and more. While these are not killer expenses if broken, it may be a good idea to have a warranty in place until you have a large enough savings that you can replace and repair these items yourself.
This list is not comprehensive in the least. New real estate investors make mistakes every day. It will happen no matter how big the list. Find a mentor who has done what you are looking to do. Get advice and confirm your first few deals with them. Someday you may be that very mentor.
by David Glenn | Jan 18, 2017 | CRESTICO
Buying a home is a dream for many people living in America today. Renting a home is like throwing away money every month. It helps the owner of that home build up equity without helping the renter. The problem is that many people do not have the funds in their bank accounts or budgets to gather up enough cash for a down payment. As lenders often ask for a down payment equal to 10% of the home’s total purchase price, it’s easy to see why so many middle class people keep renting. Some are smart enough to know how to put money back to buy a house though.
Compare Mortgage Rates
According to Freddie Mac, mortgage Interest Rates dropped for the first time in months at the beginning of 2017. Freddie Mac found that these rates dropped to 3.44% on 15-year fixed rate mortgages and to 4.20% on 30-year fixed rate mortgages. These figures represent the interest charged on Home Loans taken out this year alone. Comparing mortgage rates is a smart way for prospective home buyers to see the rates charged by different lenders and to see which lenders will give them the best rates to help them better afford their dream homes.
Look at Mortgage Types
Smart home buyers will compare and contrast different loan types to determine which one will help them spend less money on a loan. A fixed rate mortgage is a home loan that comes with one interest rate that never changes over the course of the loan. An adjustable rate mortgage is fairly different because the interest rate on that loan changes as the market changes. Bank Rate also describes an interest only jumbo loan, which allows a buyer to pay only on the interest on the loan for up to 10 years before making payments on the loan’s principal.
Think Outside the Box
Thinking outside the box can help almost anyone find a solid home without spending a lot of money and without saving for years. The U.S. Department of Housing and Urban Development, also known as HUD, offers residential properties for sale, including single family homes and buildings that can accommodate up to four families. Though anyone can purchase one of these homes with proper financing in place, HUD explains that homes will typically go to those willing to live in the home first before the department will offer those homes to investors. The Federal Housing Administration can also assist American citizens with housing purchases. It even has a program designed to help community workers purchase homes.
Create a Savings Account
One of the best ways to save for a new home is with a dedicated savings account. Many financial institutions now offer a round up plan. When an individual uses his or her debit card to make a purchase, the bank will round up to the next dollar and put that extra cash in the individual’s savings account. If a purchase cost $8.19, the bank will put $.81 cents in the account. Some will find it helpful to save any dollars they get back from making cash purchases and deposit those bills in their savings accounts later.
Save On Other Purchases
Comparison shopping helps customers find the best prices on the products and services that they need. Whether they save money on car insurance after retirement, landscaping or even new glasses, they have more money they can put back towards a down payment. Comparison sites allow shoppers to enter the product they want and view how much that item costs on multiple websites, including any shipping or handling fees charged by the site. Even saving a few dollars on groceries is a few dollars more towards a dream house. Smart home buyers know that saving and putting back cash and looking at mortgages and rates can help them buy the perfect home.
by David Glenn | May 19, 2016 | CRESTICO
Purchasing your first home might be one of the most expensive purchases you’ll make, which makes it even more important to do it right. The best way to go about shopping for a house is to line yourself up with a good realtor, explore financing and determine the priorities you seek in a new home. Most first time buyers make one or two mistakes during the process of buying a home. However, using these tips can help you to avoid mistakes and highlight important items to consider as you begin shopping for homes.
Determine What Features You Need
Before looking at homes, make a checklist of the features you need. For example, you might list the number of bedrooms, a large yard, fencing, home office and a family room. Next, you could list features that would be nice to have like a swimming pool, garden or patio.
Contact a Realtor
Ideally, if you’ve never been through the home buying process, you should consider working with a realtor to find a new home. He or she can show you several homes, write contracts, make recommendations and provide guidance for you as you complete the home buying and closing processes. Working with a realtor to find homes in the neighborhoods you like can save you time and money.
Realtors have access to the MLS (Multiple Listing Service), which is essentially a huge database of home listings supplied by Real Estate brokers. The listings include details and features about each property that is for sale. Your realtor can use the MLS to choose homes to fit your budget and location requirements, which makes it faster and easier to find your dream home.
Location Considerations
Unfortunately, many new home buyers fail to take into consideration the importance of where the home is located. For instance, you may have found the perfect home, but if it’s too far from work it may turn into a major problem. Before choosing neighborhoods, consider these questions:
Is a short commute to work a requirement?
- Does the home need to be in a good school district?
- Do we want nearby access to entertainment?
- Is public transportation a requirement or just a bonus?
Household Costs and Other Expenses
It is smart to get a rough estimate of what your monthly expenses will run for a new house before purchasing. To start with you’ll have the principal and interest on the home. Add in insurance and taxes. You may have to factor in home owner association fees. Next, you’ll want to consider power and water utilities. Don’t forget telephone and internet services.
Homeowners Insurance
The home and location can affect the cost of homeowners insurance, which is required when carrying a loan on the property.
- Homes located near fire stations or hydrants usually result in a discount.
- Home security systems may qualify for better rates.
- Neighborhoods in high crime areas cost more to insure.
- Homes in known flood zones or areas prone to earthquakes are more expensive to insure.
Home Inspection
Ordering home inspections on new or used homes isn’t a requirement for purchasing but it often proves to be a smart idea. Home inspectors provide an unbiased home inspection and cost about $300 to $500. They inspect the main household systems such as heating, cooling, electrical and plumbing.
Credit Check and Financing
Contact one of the three credit bureaus, and pull a free copy of your credit report before you consider financing and shopping for a home. Make sure the report appears to be accurate. The best Interest Rates for loans are offered to those people that have a good or higher credit score rating.
Keep in mind that you may have to put down as much as 20 percent for you down payment on the home. However, it’s possible, you may qualify for federally-backed loans, which often have Lower Interest Rates, small down payments or no down payment required.
Before shopping for a home, contact several banks and loan institutions to check their interest rates. It’s also a smart idea to get pre-qualified for a loan before home shopping.
Take your time to find the right home that meets all you requirements. Consider working with a realtor and a home inspector for professional services and recommendations.
by CRESTICO | Aug 2, 2013 | CRESTICO
Section 129B(d) of TILA, as added by the Dodd-Frank Act, permits consumers to bring actions against individual mortgage loan originators for violations of certain provisions of TILA. For example, while LO’s can be held personally liable for receiving compensation in violation of the Rule, they are not personally liable under TILA/LO Comp for failing to maintain the records of compensation required by the rule. The LO Comp Rule, which implements the DFA’s statutory authority confirms this personal liability through its changes to Reg. Z’s definitions. Specifically, the change to § 1026.36 (a)(1)in the LO Comp Rule clarifies the definition of “loan originator” to mean either the individual LO or the company. The following is from the CFPB’s small business compliance guide which seeks to use plain language explanations for the Rule (although it still warns you that you need to see the actual Rule for details): “A “loan originator” is either an “individual loan originator” or a “loan originator organization.” “Individual loan originators” are natural persons, such as individuals who perform loan origination activities and work for Mortgage Brokerage firms or creditors. “Loan originator organizations” are generally loan originators that are not natural persons, such as mortgage brokerage firms and sole proprietorships”
TILA is confusing for a lot of reasons, but one of the biggest areas of confusion in the LO Comp and Ability to Repay rules are the differing obligations imposed on “Creditors”, “Loan Originators”, and “Loan Originator Organizations”. These definitions are critical in determining who is responsible for any obligation under TILA. LO comp is one of the few times where the obligation extends all the way down to the individual LO, but the liability is potentially huge. I don’t know about the issue from the LO’s perspective (ask an attorney; see below) – does the borrower have a life of loan defense? As best I understand it, the life of loan defense is true as it relates to foreclosure but the remedy is not a free house, it is three years of interest and other fees (loan, attorney) – a monetary judgment. So there shouldn’t be any runs on any particular company.
Attorney Brad Hargrave (MedlinHargrave) writes, “Loan originator compensation is one area of Truth in Lending and Regulation Z wherein someone other than a creditor; namely, the loan originator, can also be held liable for a violation. The citation in support of this proposition is found at 15 USC §1639b(d)(1) which provides, in pertinent part, that ‘for purposes of providing a cause of action for any failure by a mortgage originator, other than a creditor, to comply with any requirement under this section, and any regulation prescribed under this section, section 1640 shall be applied with respect to any such failure by substituting ‘mortgage originator’ for ‘creditor’ each place such term appears in each such subsection.’ And, §1640 is that section of TILA that imposes civil liability for various TILA violations, including those sections regarding LO Compensation. (I have not addressed the recoupment and setoff issues in the event of foreclosure in the context of the LO, given that an LO would not be the party initiating the foreclosure; and thus, this section really isn’t applicable to an LO).”
Mr. Hargrave’s note continues, “The penalties are potentially severe. In an individual civil action brought by a consumer, the creditor who paid the violative compensation could be liable to the borrower for actual damages, plus twice the amount of any finance charge in the transaction (capped at $4,000), plus an amount equal to the sum of all finance charges and fees paid by the consumer (unless the creditor can demonstrate that the failure to comply is not material), plus reasonable attorneys’ fees and court costs if the borrower were to prevail. The loan originator’s exposure to such a claim (per 15 USC § 1639b(d)(2))is the greater of actual damages to the consumer or three times the total amount of direct and indirect compensation paid to the LO in connection with the subject loan, plus the costs to the consumer of the action, including reasonable attorneys’ fees. In addition, the CFPB could sue the creditor and the loan originator in Federal District Court and seek any one of a number of remedies, including restitution and/or disgorgement, and appropriate injunctive relief, as to all loans wherein the LO received unlawful compensation. It is also possible that the matter could be referred to another agency for enforcement.”
