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| Topics and Issues | Credit scores (37) |
In October 2023, FHFA Director Sandra L. Thompson spoke at the 2023 Mortgage Bankers Association Annual Convention & Expo. There, she spoke about FHFA’s credit score initiatives:
I would like to turn to another initiative I announced last year at this convention: the validation and approval of two new credit score models – FICO 10T and VantageScore 4.0 – for use by the Enterprises.
In that announcement, we also said that lenders would have the option to use credit reports from two of the three national consumer reporting agencies rather than requiring reports from all three.
These updates were made to promote a fair and inclusive approach to evaluating borrowers while enhancing competition in the market and lowering costs for consumers.
The new models provide benefits both in terms of accuracy and the number of borrowers scored, while the bi-merge report is expected to maintain accuracy and increase competitive forces– findings supported by internal and external analysis.
Our efforts to implement these changes are moving full steam ahead.
Over the past year, the Enterprises have laid the groundwork by producing a partner playbook, issuing preliminary timelines, and providing training opportunities. They have also taken part in industry education webinars and conducted a survey that received nearly 1,000 responses from market participants.
Most recently, FHFA began a process for hearing from interested stakeholders with a series of forums and listening sessions.
These public engagement sessions are open to all and will allow market participants to identify issues, opportunities, and challenges associated with the transition. And I encourage you all to participate.
Additionally, FHFA and the Enterprises have been working diligently to provide further resources to stakeholders. I am happy to report that a great deal of progress has been made in our efforts to acquire and publish historical data, which will allow stakeholders to conduct their own analyses of the new models and bi-merge approach. More details on this front will be coming shortly through our stakeholder forums.
Our focus, first and foremost, is on getting this transition process right. We are moving forward with a sense of urgency, while at the same time remaining flexible to operational considerations and new developments. We appreciate your partnership to advance this initiative.