ICBA and other groups raised concerns about a Federal Housing Finance Agency plan for transitioning Fannie Mae and Freddie Mac to new credit score models.

New Requirements: As required by the FHFA, the government-sponsored enterprises are:

  • Replacing the Classic FICO credit score model with FICO 10T and VantageScore 4.0.

  • Requiring lenders to pull and deliver both the FICO 10T and VantageScore 4.0 credit scores on each loan sold to Fannie and Freddie.

  • Transitioning from requiring three credit reports (tri-merge) to requiring two credit reports (bi-merge) for single-family loan acquisitions.

Joint Letter: ICBA and other groups representing lenders, servicers, mortgage insurers, and consumer advocates raised concerns that the implementation timeline and plan lack data and transparency and fail to address the far-reaching effects, significant costs, and operational complexity of the proposed policy changes.

Recommendations: The letter calls on the FHFA to include in the plan:

  • A comprehensive, transparent, and iterative stakeholder engagement process.

  • Robust data transparency, including the release of long-term historical datasets for the different credit score models to support analysis of their impact on various business functions.

  • A recalibrated timeline that accommodates data analysis and modeling as well as more comprehensive stakeholder engagement.

Previous ICBA Comments: ICBA has strongly opposed the mandatory use of multiple scores in comments to the FHFA and during the agency’s listening session on this initiative. ICBA has previously cited the potential cost for smaller lenders of implementing the changes and said they might be more costly than they’re worth, especially for community banks.