Coalition urges FHFA to adjust credit model transition timeline with recommendations for well-coordinated and sensibly paced execution strategy.

The Federal Housing Finance Agency (FHFA) announced late last year that it is replacing the Classic FICO credit model used by Fannie Mae and Freddie Mac with the FICO 10T and the VantageScore 4.0 credit score models and outlined the timeline for implementation. But a coalition of 17 associations, led by the Housing Policy Council (HPC), is now asking for more time with the transition and highlighting the challenges related to it. In a letter to FHFA Director Sandra Thompson, HPC and other organizations — including the Mortgage Bankers Association, the National Association of Realtors, the American Bankers Association and others representing lenders, servicers, consumer advocates, and mortgage insurers — highlight the issues related to the transition. “The transition, as outlined, will occur in a multi-stage process that does not adequately address the far-reaching impacts, significant costs, and immense operational complexity of the policy changes,” the letter states. “We write to urge FHFA to reformulate the proposed timeline to provide sufficient time and an adaptable structure that will permit stakeholder feedback to be considered and incorporated.” Earlier the HPC also submitted a separate letter highlighting the potential issues. Both letters say that such a transition accounts for “one of the most ambitious projects ever undertaken within the housing finance system -- Fundamentally, our organizations are extremely concerned that the three-and-a-half-year timeline and process outlined threatens the stability of the housing finance system by not recognizing this reality.”

Source: HousingWire