Aria Radnia 🇮🇷@QualityInvest5
A visual breakdown of how the mortgage industry value chain works, and who the key players are 👇
Following the Red Arrows:
1️⃣ You generate credit activity through your bank.
2️⃣ Your bank reports that activity to the credit bureaus.
3️⃣ When you apply for a mortgage, the bureaus( $EFX, $TRU, and $EXPN ) get $FICO to score your data (costs about $5–$10)
4️⃣ The bureaus then bundle everything into a credit report and sell it to the bank for $20–$30 each.
5️⃣ The bank uses that report to make a lending decision
Follow the Black Arrows:
1️⃣ You pay roughly $500 in application fees
2️⃣ The red arrow process happens ––> your reports are pulled and a lending decision is made
3️⃣ The bank sells your mortgage to a GSE (Government-Sponsored Entity)
4️⃣ The GSE bundles many mortgages into Mortgage-Backed Securities (MBS)
5️⃣ Each mortgage inside that MBS gets RE-SCORED by $FICO (see orange)
6️⃣ Those MBS are then sold on the secondary market to big investors like $GS or $JPM
The key here? Step 5 in the black arrow chain: *securitization*
That’s where $FICO re-scores bundled mortgages, holding a 98% market share and generating most of its score-based revenue.
I hope this visual clears things up, it’s a complex system, and I probably messed up a few details but I hope it helps! 😅
