FHFA: New opportunities for feedback from stakeholders affected by the new requirements’ implementation.

The next steps in the adoption of new credit score requirements by Fannie Mae and Freddie Mac will include more public engagement in the form of stakeholder forums and listening sessions, the Federal Housing Finance Agency (FHFA) has announced. The public engagement channels are aimed, in part, at identifying the issues, opportunities and challenges regarding the successful implementation of the FICO 10T and VantageScore 4.0 credit score models for use by the government-sponsored enterprises (GSEs). Approval of the models for GSE utilization was announced by the FHFA in October last year after a long review process that included what the FHFA described as “rigorous testing.” Both FICO 10T and VantageScore 4.0 “[exceeded] the required thresholds for accuracy, reliability and integrity.” After the adoption process is complete, scores from both models, when available, will be required on all single-family loans acquired by Fannie and Freddie. Additionally, it was also announced in October that the GSEs would switch from a tri-merge requirement on credit reports to a bi-merge requirement. Currently, credit reports are required by Fannie and Freddie from all three nationwide consumer reporting agencies: Equifax, Experian and TransUnion. Following the transition, the enterprises will only require reports from at least two of the reporting agencies. The change, per the FHFA, will “promote competition in the market while maintaining the information needed to support robust risk management.” The switch, the FHFA said, was originally proposed to happen in the first quarter of 2024, but will now occur later. The new opportunities for stakeholder feedback are essentially another round of collecting input from the many parties whose operations will be affected by the new requirements’ implementation. The FHFA announced engagement opportunities back in March, but has apparently decided that further feedback collection is needed to ensure the smooth transition. “We want to hear from market participants and impacted stakeholders to ensure a smooth transition that minimizes costs and complexity,” said Sandra Thompson, director of the FHFA. The announcements of further public engagement and an extension of the transition process were met with praise from industry groups.

Source: Scotsman Guide