What Can FHFA Do to Ease Credit-Score Problems?
The federal housing agency already made changes, such as allowing on-time rent payments to be considered for a loan, and it’s asking for recommendations to do more.
WASHINGTON – The Federal Housing Finance Agency (FHFA) says it wants to help more buyers qualify for homes. Its goal is to tweak credit score requirements for loans to be purchased by Fannie Mae or Freddie Mac – to find a way to qualify more people for a mortgage without adding additional risk for the lender.
FHFA now wants recommendations on how it can improve the process. It plans stakeholder forums and listening sessions to identify issues, opportunities and challenges related to new requirements, including potential refinements to the timeline for adoption.
“This engagement process represents the next logical step in our efforts to ensure robust public input as we work towards implementing the new credit score requirements at (Fannie Mae and Freddie Mac),” says FHFA Director Sandra L. Thompson. “We want to hear from market participants and impacted stakeholders to ensure a smooth transition that minimizes costs and complexity.”
Interested parties should send their name, affiliation and contact information to CreditScores@fhfa.gov. FHFA expects to provide further details to participants and hold initial sessions in the coming weeks. Those who wish to participate should respond by Sept. 25, 2023.
Credit score changes
In October 2022, FHFA announced approved both the FICO 10T and VantageScore 4.0 credit score models after a lengthy review process of its current credit score requirements, as required by statute and regulation. It says both of the “newly approved models exceed the required thresholds for accuracy, reliability and integrity.”
Following an implementation process, Fannie Mae and Freddie Mac will require scores from both models, when available, on all single-family loans they acquire.
That same month, FHFA announced a change to its tri-merge requirement, which required lenders to consider credit reports from all three nationwide consumer reporting agencies, to a bi-merge requirement, which requires credit reports from at least two agencies.
FHFA expects that the implementation date for the bi-merge requirement will occur later than the first quarter of 2024, as was initially proposed.
“FHFA’s reformulated implementation plan is an acknowledgment of the significant operational complexities and the magnitude of this effort on the housing finance system, consumers and investors of mortgage assets,” says Bob Broeksmit, president and CEO of the Mortgage Bankers Association (MBA). “MBA has advocated for a longer implementation timeline, and we appreciate FHFA taking our recommendations to heart.”
Related resources:
- FHFA Credit Score Transition Page
- Fannie Mae Credit Score Transition Page
- Freddie Mac Credit Score Transition Page
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