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NAFCU’s Kossachev shares CU priorities at FHFA public listening section
The Federal Housing Finance Agency (FHFA) on Tuesday held a public listening session on credit score models where FHFA Acting Director Sandra Thompson provided opening remarks and heard from representatives from different organizations. NAFCU previously highlighted the importance of accurate credit reporting for consumers and financial institutions and has shared support for lender flexibility.
During the event, NAFCU Vice President of Regulatory Affairs Ann Kossachev delivered remarks urging for alternative models that more accurately capture creditworthy borrowers and permit them access to affordable credit in order to bring more competition among credit score providers in the mortgage market, which will benefit unbanked and underbanked consumers.
Section 310 of the Economic Growth, Regulatory Relief, and Consumer Protection Act of 2018 required the FHFA to establish a structure for validation and approval of credit score models. During the listening session, the FHFA announced that the GSEs have completed all four phases of the validation and approval process outlined in the agency’s 2019 final rule.
Kossachev urged the FHFA to consider the widespread use and reliance among mortgage lenders and investors on scores other than FICO as it evaluates the GSE’s recommendations, noting that providing lenders the ability to choose a credit score model based on their individual risk assessment and the needs of their members is the best option.
NAFCU also supports lender choice because it would advance Congress’s goal of improving the availability of credit for those who are “credit invisible.”
In addition, Kossachev shared concerns regarding a reasonable transition time for lenders to effectively adopt and implement a new credit score once it is approved.
The association also suggested that GSEs consider providing additional resources for lenders through the Mortgage Translations Clearinghouse to help borrowers better understand credit scoring and how it’s used to determine loan pricing.
NAFCU will continue working with the FHFA to expand access to mortgage credit among consumers in need.