As expected, the Federal Housing Finance Agency announced today that it will not issue a decision this year about updating the credit score models required by Fannie Mae and Freddie Mac. Instead, the agency will shift its focus toward implementing a section of S. 2155 — the new regulatory reform law — that requires it to define through rulemaking the criteria the GSEs will use to validate credit scores.
FHFA Director Mel Watt noted that moving forward with the current evaluation process “would be duplicative of, and in some respects inconsistent with” the requirements set forth in S. 2155. He added that, as directed by the law, the agency will be issuing a proposed rule for comment.
The American Bankers Association has previously urged FHFA to carefully consider the effects of any changes to credit scoring requirements, as any such changes could significantly affect lenders’ ability to safely and soundly underwrite loans and ensure fair and equitable treatment of loan applicants. ABA continues to advocate for models that are empirically derived, accurately predictive and well-tested prior to implementation, and will engage with FHFA as it begins the rulemaking process.