WASHINGTON—The Federal Housing Finance Agency (FHFA) has issued a request for input regarding alternative credit scoring models at government-sponsored enterprises (GSEs) Fannie Mae and Freddie Mac that focuses on access to credit, costs and operational considerations.
The credit scores being considered include Classic FICO, FICO 9 and VantageScore 3.0.
In its analysis, NAFCU said it is supportive of regulatory and legislative efforts to allow for the consideration and use of alternative models in order to bring more competition among credit score providers in the mortgage market; doing so will help unbanked and underbanked consumers, the trade association 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.
In a letter earlier this year, NAFCU, CUNA and other trade groups requested the FHFA work with industry stakeholders before moving forward with new or alternative GSE credit score models. FHFA Director Mel Watt has previously indicated a change in credit scoring models wouldn't happen until mid-2019.
NAFCU said it also supports legislation introduced in July, the 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.
Feedback on the implications of changing the GSEs' credit scoring models is due Feb. 20, 2018.