The American Bankers Association and more than 15 trade groups have actually offered feedback to the Federal Housing Finance Agency on strategies to upgrade the credit report procedure. Under the proposition revealed in March, Fannie Mae and Freddie Mac would change the existing FICO credit report design with the FICO 10T and the VantageScore 4.0 credit report designs, and shift from needing 3 credit reports to 2 for single-family loans.
While supporting FHFA’s objectives to recalibrate credit rating, market groups raised issues about timing and stakeholder feedback. FHFA “does not adequately address the far-reaching impacts, significant costs and immense operational complexity of the policy changes,” the groups composed in a remark letter launched today. They suggest “sufficient time and an adaptable structure” to think about and integrate stakeholder feedback, including that a “disciplined and orderly transition will minimize risk to the stability of the housing finance system.”
The groups likewise required a market feedback procedure that consists of “robust data transparency,” particularly consisting of the release of long-lasting historic datasets for Classic FICO, FICO 10T and VantageScore 4.0, enabling analysis of the modifications and the style of brand-new designs that thinks about the “costs, complexity, consumer impact and policy implications of the transition.”
“We expect that one external complication that could affect the timeline is government agency adoption of the new scoring models,” the groups composed. “We anticipate that the enterprises may need to advise the government lending programs, to assist with simultaneous policy updates to maintain existing underwriting pathways between programs. Without this type of coordination and concurrent adoption, there could be significant consumer confusion and operational backlog, should a prospective borrower change loan programs.”