October 17, 2023

Senators call on FHFA to reconsider credit report changes

mortgage docA group of Senate Republicans, led by Senate Banking Committee Ranking Member Tim Scott, R-S.C., sent a letter to Federal Housing Finance Agency (FHFA) Director Sandra Thompson over the weekend raising concerns about the agency’s proposed changes to credit report requirements for the government-sponsored enterprises (GSEs).

In the letter, the senators expressed support for the inclusion of alternative data sources to better capture creditworthy borrowers, which NAFCU has long supported, but cautioned against incomplete data by only requiring reports from two reporting agencies.

NAFCU and several other housing finance stakeholders offered feedback to the FHFA on the credit score requirements earlier this year. While the groups shared concerns about the proposed timeline and lack of stakeholder feedback incorporated into the plan, NAFCU is supportive of the bi-merge approach as it will reduce costs and offer many benefits to borrowers, especially those in underserved areas.

Thompson addressed the FHFA’s credit score initiative during a speech Monday. She defended the benefits of the new models and bi-merge report – maintaining accuracy and increasing competition in the market. She also noted the agency has been holding stakeholder forums to learn more about the issues, opportunities, and challenges associated with the transition and that the FHFA will soon announce details of historical datasets to allow stakeholders to conduct their own analyses of the bi-merge approach.

For more information, an episode of NAFCU’s Credit Union Policy Podcast (CUPP) tackles the FHFA’s initiative to validate and incorporate new credit score models and credit report requirements into the housing finance market. The FHFA also has additional resources online.