FHFA to Seek Additional Industry Feedback on Proposed Credit Score, Credit Reporting Changes
Written By: Joel Palmer, Op-Ed Writer
The Federal Housing Finance Agency (FHFA) said it expects a delay in the implementation of previously announced credit reporting requirements.
The agency also announced that it would seek more public engagement on the transition to updated credit score models and credit report requirements for loans acquired by Fannie Mae and Freddie Mac.
FHFA said engagement would include stakeholder forums and listening sessions to identify “a wide variety of issues, opportunities, and challenges related to successful implementation of the new requirements, including potential refinements to the timeline for adoption.”
“This engagement process represents the next logical step in our efforts to ensure robust public input as we work towards implementing the new credit score requirements at the enterprises,” said FHFA Director Sandra L. Thompson. “We want to hear from market participants and impacted stakeholders to ensure a smooth transition that minimizes costs and complexity.”
In March, FHFA announced its timeline for replacing the Classic FICO credit score model with FICO 10T and VantageScore 4.0, which the agency validated in October 2022. The transition to the new models also includes changing the requirement for three credit reports to only two credit reports for single-family loan acquisitions by Fannie Mae and Freddie Mac.
At the time, FHFA said the switch from the three credit report requirement to two could happen by the first quarter of next year. Now FHFA expects that the transition from a tri-merge requirement to a bi-merge one “will occur later than the first quarter of 2024.”
The agency’s March announcement indicated that implementation of the new credit score models was expected to occur over two phases, which full incorporation occurring by the fourth quarter of 2025.
The latest announcement by FHFA did not mention a delay in implementing the new credit score models. But some industry stakeholders had previously requested the agency do so.
In July, the Community Home Lenders of America (CHLA) sent a letter urging FHFA to alter its implementation schedule and to begin with process using only VantageScore, while deferring use of FICO 10T to a later phase.
CHLA said it supports having public sessions about the issue and said it looks forward to “continuing to work with Director Thompson, and her staff, at developing a credit scoring model for the GSEs which support and protects all borrowers.”
This is the second time in the last several months that a major initiative by FHFA has been affected by industry criticism.
In May, the agency announced it would not implement a new upfront fee for certain borrowers with a debt-to-income above 40 percent. The additional fee, announced in January, was originally scheduled to take effect on May 1, along with recalibrated pricing grids. The new DTI fee was then delayed until August 1 before the agency completely rescinded it.
Interested parties who wish to participate in public sessions regarding credit scores and credit reports should send their name, affiliation, and contact information to CreditScores@fhfa.gov by September 25. FHFA said it expects to provide further details to participants and hold initial sessions in the coming weeks.
About the Author
As an NAMU® Opinion Editorial Contributor, Joel Palmer is a freelance writer who spent 10 years as a business and financial reporter and another 10 years in marketing for the insurance and financial services industries. He regularly writes about the mortgage industry, as well as residential and commercial real estate, investments, and retirement income planning. He has also ghostwritten books on starting a business, marketing, and retirement income planning.
