Expert Call Takeaways: The MBS Market Needs to Adapt to Lender's Choice

Research evidence excerpt

Expert Call Takeaways: The MBS Market Needs to Adapt to Lender's Choice

Equity Research

Flash Comment — June 4, 2026

Business & Information Services

Expert Call Takeaways: The MBS Market

Needs to Adapt to Lender's Choice

Our Call Jason Haas, CFA

We hosted an expert call with Mario Ichaso, Executive Director of Agency RMBS Trading Equity Analyst | Wells Fargo Securities, LLC

Jason.Haas@wellsfargo.com | 212-214-5313

Strategy at Wells Fargo. The introduction of lender’s choice introduces uncertainty, but

Jun-Yi XieIchaso sees the MBS market digesting the changes over time.

Associate Equity Analyst | Wells Fargo Securities, LLC

Jun-Yi.Xie@wellsfargo.com | 212-214-8150

Initial Thoughts Keegan Antico

Lender’s choice introduces ambiguity, but MBS investors should be able to overcome Keegan.Antico@wellsfargo.com | 212-214-3326

it. MBS investors are focused on accounting for adverse selection risk, and the lack of

transparency around new LLPA grids for VantageScore 4.0 (VS) make it challenging,

however Ichaso believes the market will adapt as these dynamics become better

understood. Ichaso noted that distinguishing prepayment behavior between VS and FICO

will take time and requires observation ideally across a full credit cycle.

Ichaso has not yet observed meaningful volumes of VS-scored mortgages being

included in MBS, though he noted this likely reflects the typical 3-4 week lag between loan

origination and securitization. Feedback from lenders within the pilot program has been

broadly positive, as VS can score a wider range of consumers and comes at a lower cost

than FICO. Ichaso expects VS-scored borrowers to exhibit slower prepayment behavior, as

VS may skew towards younger, thin-file consumers.

Ichaso does not expect a material risk premium on MBS with VS-scored loans.