Fannie Mae and Freddie Mac are private companies chartered by Congress. They buy mortgages from the lenders who write them, standing behind about 70% of the market. For decades, they accepted exactly one credit score.
- That changed on Tuesday: Federal Housing Finance Agency Director Bill Pulte said rival VantageScore will sit alongside FICO on a single pricing grid. Rocket Companies (NYSE:RKT) named VantageScore its preferred model for Rocket Mortgage. Shares of Fair Isaac (NYSE: FICO), the company behind the score, fell more than 25%.
- No clear winner: Equifax (NYSE: EFX), TransUnion (NYSE:TRU), and Experian jointly own VantageScore. Their shares slipped in early trading, too.
- Same asset, nowhere near housing: Cboe Global Markets (NYSEMKT: CBOE) also runs on an exclusive right someone else grants. On Tuesday, it extended its exclusive license to list S&P 500 Index options through 2051, with S&P Dow Jones Indices as counterparty. Losing those rights sits first on Cboe's risk factors. Shares rose 3.35%.
Neither moat is brand, switching costs, network effect, or cost advantage. It's permission. Fair Isaac's came from two buyers answering to a federal regulator, and the regulator changed the rules. Cboe's came from a commercial partner and runs past most holding periods.