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Government Engagement

Both GSEs require that lenders use outdated FICO scoring models for loans delivered through their automated channels (Freddie Mac guidelines here; Fannie Mae here).

However, in response to the urging of many stakeholders, FHFA and the GSEs are revisiting the question of which credit scoring models may be used when underwriting loans likely to be sold to the GSEs. VantageScore fully supports this effort to create a competitive and more inclusive mortgage market and stands ready with our owners—Equifax, Experian and TransUnion—to help all industry participants proceed through this process and assist with implementation. Upon implementation, consumers and lenders alike will benefit.

To that end, at the highest levels of government, a constructive dialogue is underway. Positive actions from the government include:

FHFA Leadership

Through its 2015 Scorecard for Fannie Mae and Freddie Mac, the Federal Housing Finance Agency (FHFA) ordered Fannie Mae and Freddie Mac to: “Assess the feasibility of alternate credit score models and credit history in loan-decision models, including the operational and system implications.” FHFA later released the 2016 Scorecard for Fannie Mae, Freddie Mac, and Common Securitization Solutions. Among its provisions, the GSEs are to “conclude assessment of leveraging alternate or updated credit scores for underwriting, pricing, and investor disclosures and, as appropriate, plan for implementation.”

This process is ongoing and has broad support. Policy makers and many of the most influential housing advocates and industry representatives favor a more competitive environment and the use of updated, more inclusive credit scoring models.

Legislative Activity

Congress has also acted. On December 10, 2015, Rep. Ed Royce (R-CA) and Rep. Terri Sewell (D-AL), both Members of the House Financial Services Committee, introduced H.R. 4211, a bill: “To require Fannie Mae and Freddie Mac to establish procedures for considering certain credit scores in making a determination whether to purchase a residential mortgage, and for other purposes.” And a number of other Members of Congress, including the Chairs of the Congressional Black Caucus, Congressional Hispanic Caucus, Congressional Asian Pacific American Caucus and the Congressional Progressive Caucus have urged FHFA to require the GSEs to implement other scoring models in addition to the existing legacy model.

Additional resources

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