FHFA Publishes Final Rule on Credit Score Models
The Federal Housing Finance Agency yesterday announced a final rule on validation and approval of third-party credit score model(s) that can be used by Fannie Mae and Freddie Mac.
The rule implements the requirements in Section 310 of the Economic Growth, Regulatory Relief, and Consumer Protection Act (s. 2155) enacted in May 2018.
The regulation requires a four-phase process for validation and approval of credit score model(s):
--Solicitation of applications from credit score model developers;
--Submission and initial review of submitted applications;
--Credit score assessment; and,
--Enterprise business assessment.
FHFA Director Mark Calabria said the final rule is “an important step” to accurately measure risk.
The rule will become effective 60 days after publication in the Federal Register. Within 60 days of this effective date, FHFA will begin review of the materials the Enterprises plan to use in the public solicitation process. After FHFA approves those materials, the Enterprises will make details of the solicitation process publicly available. FHFA will determine the date that the initial solicitation will open for credit score model developers to apply.