FHFA to Create New Credit Score Rule For GSEs
The Federal Housing Finance Agency is moving on from. its once ongoing review of new credit score models, according to a recent report. The agency will now look to write a new credit score rule that will incorporate alternative credit scores for applications through Fannie Mae and Freddie Mac.
"A section of the regulatory reform bill signed by President Trump in May requires the FHFA to define, through rulemaking, the standards and criteria Fannie Mae and Freddie Mac will use to validate credit scoring models," according to National Mortgage News.
"Before that legislation became law, the FHFA had begun evaluating whether it should require the agencies to switch to the latest scoring model from Fair Isaac Corp., FICO 9, and/or allow the use of competitor VantageScore's latest model, 3.0. The FHFA had given itself a deadline of the end of this year to decide on new scores."
The agency will begin to develop the new rule which will take public comment in to consideration before a final rule is met. According to the NMN report, stakeholders initially came out to issue an input when changes to the rule were under review. It is likely that stakeholder input will increase once again with public comment being taken into consideration.
To learn more about the FHFA's plans to create an all new rule for credit score models used in Fannie Mae and Freddie Mac applications, click on the image above.