WASHINGTON—Federal Housing Finance Agency Director Mel Watt reiterated his comments regarding the government-sponsored enterprises' use of alternative credit scoring models – saying this change would not go into effect before mid-2019 – in a response to a letter from NAFCU, CUNA and other trade groups.
In February, nine financial trade groups urged the FHFA to engage with industry stakeholders before moving forward with new or alternative credit scoring models and to give an implementation time of 24 months once the models are approved. Watt's comments were in response to the letter.
Earlier this month, Watt told a real estate industry group that changing credit scoring models would not happen before mid-2019, when the Common Securitization Platform is fully operational and Fannie Mae and Freddie Mac have implemented the Single Security. He also noted during his remarks, and in his recent response letter, that the agency will issue a request for information this fall addressing the impact of alternative credit scoring models on access to credit, costs and operational considerations, NAFCU noted.
Recently, Senate Banking Committee members Tim Scott (R-SC) and Mark Warner (D-VA) 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.