The Federal Housing Finance Agency (FHFA) is seeking feedback from stakeholder on alternative credit scoring models at government-sponsored enterprises (GSEs) Fannie Mae and Freddie Mac.
The alternative models should that focus on access to credit, costs and operational considerations. The scores being considered are Classic FICO, FICO 9 and VantageScore 3.0. Feedback on alternative GSE credit scoring models is due Feb. 20, 2018.
Rules for Fannie Mae and Freddie Mac have already been modified by FHFA. Through their automated underwriting systems, FHFA allows for the purchase of loans to borrowers who do not have credit scores. Through this program, lenders are required to certify borrowers’ repayment histories on nontraditional forms of credit, such as rent payments or utility bills.
The National Association of Federally Insured Credit Unions (NAFCU) supports regulatory and legislative efforts to allow for the use of alternative models to bring more competition among credit score providers in the mortgage market. This will help unbanked and underbanked consumers, NAFCU said.
Earlier this year, NAFCU officials sent a letter to FHFA, requesting it work with industry stakeholders before moving forward with new or alternative GSE credit score models.
A bill introduced in July, the Credit Score Competition Act (S. 1685), would authorize the FHFA to set standards and criteria for any process used by the GSEs to validate and approve credit scoring models. NAFCU supports this legislation.
FHFA Director Melvin Watt said a change in credit scoring models likely would not occur until mid-2019.