In a letter to the Federal Housing Finance Agency, the American Bankers Association and five associations said they continue to have serious concerns about the planned implementation of new credit score requirements for single-family loans acquired by Fannie Mae and Freddie Mac.
Under the FHFA’s Credit Score Models and Reports Initiative, Fannie and Freddie would replace the current FICO credit score model with the FICO 10T and the VantageScore 4.0 credit score models and transition from requiring three credit reports to two for single-family loans. The changes were set to go into effect in the fourth quarter of this year but FHFA has pushed back to a later date as to be determined.
ABA and the other associations said they appreciated the extension of the initiative’s deadline. However, multiple elements pose critical implementation risks and are “overly complex, costly to consumers and missing key requirements that are necessary for a successful transition,” they said.
The associations said that if FHFA moves forward with the initiative, it needs to commit to data transparency and sharing as well as conduct a cost/benefit analysis and operational impact assessment. It also needs to reevaluate the bi-merge option for credit reporting rather than the current tri-merge, coordinate with prudential regulators and align the adoption of the new credit score models with government lending programs.
“We believe successful progress towards credit score modernization for the enterprises and the industry cannot move forward without these critical steps,” the associations said.
