March 24, 2023

NAFCU writes to FHFA on seasoned bulk transactions; agency seeks input on new credit score requirements

FHFANAFCU Senior Regulatory Affairs Counsel Aminah Moore wrote to the Federal Housing Finance Agency (FHFA) to request that the agency reinstate seasoned bulk transactions through Fannie Mae and Freddie Mac, the government-sponsored enterprises (GSEs). Moore noted that access to liquidity has come to the forefront with rising interest rates along with the recent bank failures; selling residential mortgages “has been an effective way for credit unions to generate liquidity.”

In the letter, Moore explained that the agency suspended seasoned bulk transactions due to several factors stemming from the COVID-19 pandemic, including an abnormally high number of mortgage originations.

“These conditions have since receded - in fact these conditions receded within a couple of months of the suspension of seasoned bulk transactions, but the suspension is still in place,” wrote Moore.

Additionally, the FHFA announced the GSEs are seeking public input on implementing new credit score requirements. The new requirements mandate credit unions that sell to the GSEs to replace the classic FICO model with the FICO 10T and the VantageScore 4.0. There will also be a transition from requiring three credit reports to two.

In the FHFA’s release, the agency issued a survey for more information on how to refine the projected implementation of the requirements. The FHFA estimates that the bi-merge credit report implementation could happen by early 2024 with the full process, including new credit score models, finishing in late 2025.

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.

Stay tuned to NAFCU Today for the latest out of Washington.