| Entities | Federal Home Loan Mortgage Corporation (Freddie Mac) (7) |
| Topics and Issues | Credit scores (37) |
FHFA issued a Credit Score Request For Input in December 2017.
As part of FHFA’s 2015 and 2016 Scorecards for Fannie Mae, Freddie Mac, and Common Securitization Solutions, each Enterprise undertook an assessment of the potential impact of updating the Enterprise credit score requirement from Classic FICO to another score or scores. The assessment has been limited to commercial credit score models available at all three national consumer reporting agencies, also known as credit bureaus or credit reporting agencies (CRAs). The assessment was also limited to credit scores used for mortgage applications received from lenders and loans acquired by the Enterprises. The Enterprises independently analyzed credit scores produced by three models – Classic FICO, FICO 9, and VantageScore 3.0.
FHFA has reviewed the current Enterprise credit score requirements to consider if the Enterprises should update their requirements and, if so, what type of update should be required. This review has included evaluating the impact of a new credit score model on access to credit, on operations in the mortgage finance industry, and on competition in the credit score market. During the course of FHFA’s work on this topic, the Enterprises and FHFA have sought individual feedback from stakeholders on the potential impacts associated with updating the current Enterprise credit score requirement.
While FHFA believes that it would be desirable to update the Enterprises’ credit score requirement from the current Classic FICO standard, FHFA has not determined which credit score option should be adopted as a replacement. This Request for Input (RFI) is intended to gather feedback on the options from interested parties that could be impacted by a change in the Enterprises’ credit score requirements, including industry and consumer group stakeholders. FHFA encourages all interested parties to provide their feedback in response to this RFI, including stakeholders that might have already provided input to FHFA.
FHFA’s review of updated credit score models is only one aspect of FHFA’s and the Enterprises’ broader inquiry into the impact that credit scores have on access to credit. This review includes the Enterprises’ ability to evaluate mortgage applications using their automated underwriting systems when a borrower does not have a credit score. Both Enterprises have developed and implemented this automated underwriting system capability – Fannie Mae in September 2016, and Freddie Mac in May 2017. Another aspect of this broader credit score project has been evaluating the current industry practice of using a borrower’s credit report and credit score from each of the three national consumer reporting agencies (CRAs) (often referred to as a “tri-merge credit report”). FHFA is evaluating whether to change from the current requirement of obtaining a credit report and credit score from all three of the CRAs to a requirement to obtain only two or one report and score from the CRAs for each mortgage applicant.