The Federal Housing Finance Agency on Monday responded to recent industry communications expressing concerns about implementation timeframes for credit score reforms. The agency offered that it is considering potential adjustments to a proposed timeline under which Fannie Mae and Freddie Mac would replace the current FICO credit score model with the FICO 10T and the VantageScore 4.0 credit score models, as well as a planned transition from requiring three credit reports to two for single-family loans. The comments were in reply to a June letter signed by the American Bankers Association and 16 organizations expressing concerns about the proposal.
Under the proposed timeline, FHFA would implement the new credit score models over two phases in 2024 and 2025. The groups in the letter said the agency had not adequately addressed the far-reaching effects, significant costs and immense operational complexity of the policy changes it proposed. They recommend “sufficient time and an adaptable structure” to consider and incorporate stakeholder feedback, adding that a “disciplined and orderly transition will minimize risk to the stability of the housing finance system.”
In its response, FHFA said it is considering potential adjustments to the proposed timeline to ensure it facilitates a smooth transition to the new models and requirements. The agency also said that it understood the need for data to support stakeholder analysis of the effects of the new credit score models, so is “working diligently to secure the historical data needed for this analysis.” FHFA added that it and the GSEs are developing mechanisms to ensure stakeholder engagement, such as publishing a playbook with timelines and resources, as well as training opportunities.
