WASHINGTON—The Federal Housing Finance Agency plans to issue a request for information this fall addressing the impact of alternative credit scoring models on access to credit, costs and operational considerations, FHFA Director Mel Watt told a real estate industry group this week.
The RFI will also include questions regarding competition and the use of competing credit scoring models to make mortgage credit decisions. "We have an obligation to get this right, and we need more information to be able to do so," Watt said.
The FHFA has already modified rules for Fannie Mae and Freddie Mac to allow the purchase of loans through their automated underwriting systems to borrowers who do not have credit scores. The program requires lenders to certify borrowers' repayment histories on nontraditional forms of credit, such as rent payments or utility bills, noted NAFCU in its analysis.
Watt also noted work has been under way on an alternative credit score model. However, he said industry feedback weighs against changing credit scoring models before mid-2019, when the Common Securitization Platform is fully operational and Fannie and Freddie have implemented the Single Security, NAFCU reported.
As CUToday.info reported here, earlier this week Senate Banking Committee members Tim Scott (R-SC) and Mark Warner (D-VA) have introduced the NAFCU-supported Credit Score Competition Act (S 1685), which would authorize the FHFA to set standards and criteria for any process used by the enterprises to validate and approve credit scoring models.