Fair Isaac Rebounds 12% After Historic Two-Day Crash, Then Tumbles Again on New FHFA Move

Fair Isaac shares staged a 12% rebound on October 1 after suffering what sources described as their worst two-day stretch on record, a collapse triggered by a late-September Federal Housing Finance Agency decision to place VantageScore 4.0 on the same mortgage-pricing grid as Classic FICO. The FHFA move, announced after market close on September 28, ended FICO's effectively exclusive position in conventional mortgage underwriting for loans delivered to Fannie Mae and Freddie Mac, and the stock fell roughly 27% across the two preceding sessions.

The selloff deepened after Rocket Mortgage announced it would make VantageScore 4.0 its preferred credit model for eligible direct-to-consumer loans in the fourth quarter, citing broader borrower eligibility and average closing savings of $1,600. Bank of America slashed its price target on Fair Isaac by half during the rout, and the stock continued to fall through even that reduced target. Law firm Levi and Korsinsky separately announced an investigation into potential securities law violations, noting that FICO management had previously asserted they anticipated no loss of volume to VantageScore in the current fiscal year.

The October 1 recovery drew support from BMO Capital Markets, which reiterated its Outperform rating on the stock citing approval of FICO's Mortgage Direct License Program. The rebound proved short-lived, however: after the close on October 1 the FHFA announced it would ease credit data requirements for Fannie Mae and Freddie Mac, sending FICO shares down an additional 4% in after-hours trading, while Equifax fell 3.4% and TransUnion dropped 2.6%.