FHFA will gather more feedback to ease switch to new GSE credit score requirements

Agency seeks more stakeholder input regarding implementation of new credit score models, credit report sourcing

The next steps in the adoption of new credit score requirements by Fannie Mae and Freddie Mac will include more public engagement in the form of stakeholder forums and listening sessions, the Federal Housing Finance Agency (FHFA) announced.

The public engagement channels are aimed, in part, at identifying the issues, opportunities and challenges regarding the successful implementation of the FICO 10T and VantageScore 4.0 credit score models for use by the government-sponsored enterprises (GSEs). Approval of the models for GSE use was announced by the FHFA in October 2022 after a long review process that included what the FHFA described as “rigorous testing.” Both FICO 10T and VantageScore 4.0 “[exceeded] the required thresholds for accuracy, reliability and integrity,” according to an agency statement.

After the adoption process is complete, scores from both models, when available, will be required on all single-family mortgages acquired by Fannie and Freddie.

Additionally, it was also announced at that time that the GSEs would switch from a tri-merge requirement on credit reports to a bi-merge requirement. Currently, Fannie and Freddie require credit reports from all three nationwide major consumer reporting agencies: Equifax, Experian and TransUnion. Following the transition, the enterprises will only require reports from two of these agencies. The change, per the FHFA, will “promote competition in the market while maintaining the information needed to support robust risk management.”

The switch, the FHFA said, was originally proposed to happen in the first quarter of 2024, but will now occur later.

The new opportunities for stakeholder feedback are essentially another round of collecting input from the many parties whose operations will be affected by the change to the new requirements. The FHFA announced engagement opportunities in March but has apparently decided that further feedback collection is needed to ensure the smooth transition.

“We want to hear from market participants and impacted stakeholders to ensure a smooth transition that minimizes costs and complexity,” said FHFA director Sandra L. Thompson.

The announcements of further public engagement and an extension of the transition process were met with praise from industry groups.

“FHFA’s reformulated implementation plan is an acknowledgment of the significant operational complexities and the magnitude of this effort on the housing finance system, consumers and investors of mortgage assets,” said Bob Broeksmit, president and CEO of the Mortgage Bankers Association (MBA). “MBA has advocated for a longer implementation timeline, and we appreciate FHFA taking our recommendations to heart.

“A comprehensive and collaborative process is necessary for these efforts to succeed, and it’s our hope that the stakeholder forums announced today will lead to sufficient time for robust data transparency and more opportunities to provide feedback.”

“CHLA commends Director Thompson for announcing public listening sessions on the transition to updated credit score models and credit report requirements for loans acquired by Fannie Mae and Freddie Mac,” said Scott Olson, executive director of the Community Home Lenders of America (CHLA).

“CHLA recently sent a letter publicly supporting FHFA and encouraging them to slow the implementation of the credit score process.  We look forward to continuing to work with Director Thompson, and her staff, at developing a credit scoring model for the GSEs which supports and protects all borrowers.”


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