Housing Market 21

NAFCU-sought change in final rule on credit score models

Date: August 13, 2019

The Federal Housing Finance Agency (FHFA) issued a final ruleTuesday to evaluate new credit scoring models for use by the government-sponsored enterprises (GSEs) that includes a NAFCU-sought change to encourage competition by allowing more developers to submit models for consideration.

“NAFCU appreciates FHFA Director Mark Calabria’s willingness to consider credit unions’ concerns about the credit scoring models rulemaking and to revise it to more accurately capture the intent of Congress,” said NAFCU Director of Regulatory Affairs Ann Kossachev. “Our members support lender choice and flexibility to choose the credit score model that best accounts for the unique characteristics in their fields of membership.”

The final rule is in response to the Credit Score Competition Act (Section 310) of S. 2155, which required the FHFA to create a process for evaluating new credit scoring models for use by the GSEs – Freddie Mac and Fannie Mae. This process mandated that FHFA develop a proposed rule, receive and evaluate public comments and issue a final rule on how the GSEs will use more than one credit score model.

Commenting on the FHFA’s proposal in March, NAFCU urged the agency to reconsider the rule as it would have prevented VantageScore and other model developers from submitting credit score models for consideration as originally written. The association and member credit unions shared these concerns directly with Calabria during a June meeting.

The final rule becomes effective 60 days after its publication in the Federal Register.