FHFA Proposes New Requirements for Validating, Approving Credit Score Models

As directed by regulatory reform law S. 2155, the Federal Housing Finance Agency today issued a proposed rule to establish new requirements for the validation and approval of credit score models by Fannie Mae and Freddie Mac. Comments on the proposal are due in 90 days after publication in the Federal Register.

Under the proposal, the GSEs would use a four-phase process to validate and approve credit score models. The process would involve soliciting applications from credit score model providers, reviewing submitted applications, conducting a credit score assessment and assessing the model in conjunction with the GSEs’ business systems. In addition, the proposed rule would establish “reasonable time periods” for each phase of the process.