FHFA Finalizes New Requirements for Validating, Approving Credit Score Models

As expected, the Federal Housing Financial Agency issued a final rule—as directed by the S. 2155 regulatory reform law—establishing new requirements for the validation and approval of credit score models by Fannie Mae and Freddie Mac. The rule will take effect 60 days after publication in the Federal Register.

Under the final rule, the GSEs will use a four-phase process to validate and approve credit score models, with each phase following an established time frame. The four phases include: 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.