Newsroom

NAFCU would like to know how the government-sponsored enterprises' (GSEs) potential use of new models will impact credit unions. The Federal Housing Finance Agency (FHFA) is gathering stakeholder feedback on how it will conduct its process for evaluating new credit scoring models for use by the GSEs, as mandated by S. 2155.

In a Regulatory Alert, NAFCU outlines the four-step validation and approval process created by the FHFA's proposal, which includes:

1. application submissions from credit score model developers;

2. an application review;

3. a credit score assessment by a GSE for "accuracy, reliability and integrity," among other requirements; and
4. an enterprise business assessment, which would assess the credit score model in conjunction with the GSEs' business systems.

For the past three years, the FHFA was working on an initiative to evaluate potential changes to the GSEs credit score requirements and issued a Request for Information (RFI) on the matter, but abandoned that initiative to work on implementing the requirements of S. 2155.

In response to the RFI, NAFCU recommended to the FHFA that it provide credit unions with more flexibility, rather than continuing to use a one-size-fits-all approach. The evaluation of new credit scoring models, NAFCU believes, will ultimately help consumers by leading to fairer, more accurate models as competition between these models increases.

Credit unions can submit comments on the proposal to NAFCU through its Regulatory Alert until March 7; comments are due to FHFA March 21.