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FHFA announces validation of FICO 10T and VantageScore 4.0
The Federal Housing Finance Agency (FHFA) announced yesterday the validation of both the FICO 10T credit score model and the VantageScore 4.0 credit score model for use by Fannie Mae and Freddie Mac. The FHFA expects implementation will be a multiyear process, and lenders will be required to deliver both scores with each loan sold to Fannie Mae and Freddie Mac.
“While implementing the newer credit score models is a significant change that will take time and require close coordination across the industry, the models bring improved accuracy and a more inclusive approach to evaluating borrowers,” said FHFA Director Sandra Thompson.
This decision comes as an effort to implement Section 310 of the Economic Growth, Regulatory Relief, and Consumer Protection Act. The FHFA has used the classic FICO score for nearly two decades.
In addition, the FHFA also noted that the agency intends to change the requirement that lenders provide credit reports from all three nationwide consumer reporting agencies to Fannie Mae and Freddie Mac. Instead, only scores from two of the three credit agencies will be required.
Earlier this year, NAFCU Vice President of Regulatory Affairs Ann Petros delivered remarks at an FHFA public session, urging for alternative credit scoring models that more accurately capture creditworthy borrowers and offer them access to affordable credit.
NAFCU will remain engaged with the FHFA to help credit unions provide the best mortgage and lending services to members, while supporting more credit opportunities for first-time homebuyers and underserved borrowers.