WASHINGTON— Concerns are being raised over the changes being proposed by the Federal Housing Finance Agency (FHFA) to credit report requirements for the government-sponsored enterprises (GSEs) by a group of Senate Republicans, led by Senate Banking Committee Ranking Member Tim Scott (R-SC).
In a letter to the FHFA, the senators expressed support for the inclusion of alternative data sources to better capture creditworthy borrowers, but cautioned against incomplete data by only requiring reports from two reporting agencies, NAFCU reported.
NAFCU and several other housing finance stakeholders offered feedback to the FHFA on the credit score requirements earlier this year, the trade group noted.
FHFA Director Sandra Thompson spoke to the FHFA’s credit score initiative in remarks earlier this week, including defending what she said are the benefits of the new models and the so-called “bi-merge report,” saying they provide accuracy and increase competition in the market.
She also noted the agency has been holding stakeholder forums to learn more about the issues, opportunities, and challenges associated with the transition and that the FHFA will soon announce details of historical datasets to allow stakeholders to conduct their own analyses of the bi-merge approach, NAFCU said.
TransUnion Report Raises Objections
As CUToday.info reported here, TransUnion has released a report that suggests the bi-merge proposal, which would utilize two instead of three credit reports during the mortgage application process could result in “unintended consequences for consumers while doing little to achieve the organization’s stated goal of reducing mortgage borrower costs.”
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