Fannie Mae and Freddie Mac are weighing an update or switch to its credit score requirements from Classic FICO to possibly another scoring model. The assessment is limited to mortgage loan applications received from lenders and mortgage loans acquired by Fannie Mae and Freddie Mac.
Some lenders call the FHFA’s move long overdue.
“The FHFA’s request for input is a step forward towards creating a marketplace where credit scoring models can be judged on their predictiveness, innovation, and inclusivity instead of the status quo where the government has created a de facto monopoly for FICO,” says Barrett Burns, VantageScore Solutions president and CEO. VantageScore 3.0 is among the credit score models independently being analyzed by the FHFA. “Monopolies never benefit markets or consumers and they create the opportunity for pricing power unchecked by competition.”
FICO says it also welcomes the FHFA’s review process for possible updates. “We appreciate the thoughtful and deliberate process the FHFA is undertaking to examine the implications of proposed changes to credit policies in the $2 trillion mortgage market,” FICO told HousingWire.
FICO says the review is an opportunity to ensure that credit underwriting requirements are in the best interest of taxpayers and home buyers.
The FHFA is urging stakeholders to offer their detailed input. Submit your input and read more.
Source: “FHFA Takes Next Step to Changing Credit Scoring Models, Requests Input,” HousingWire (Dec. 20, 2017) and Federal Housing Finance Agency