FHFA Announces Process for Implementing New Credit Score Requirements; MBA Encourages Members to Complete Survey

The Federal Housing Finance Agency recently requested stakeholder input as Fannie Mae and Freddie Mac replace the Classic FICO credit score model with the FICO 10T and the VantageScore 4.0 credit score models, and transition from requiring three credit reports to requiring two credit reports for single-family loan acquisitions.

FHFA said the bi-merge credit report implementation could occur by first quarter 2024; delivery and disclosure of the additional credit scores is estimated to begin in third quarter 2024. Incorporation of the new credit score models into pricing, capital and other processes is estimated to occur in fourth quarter 2025.

“These changes are expected to further support accuracy, innovation, and inclusion in credit score models and to reduce costs and encourage innovation in credit report requirements,” FHFA said.

Sasha Hewlett, AMP, MBA Associate Vice President of Secondary and Capital Markets, said validation of FICO 10T and VantageScore 4.0, announced at the MBA Annual Convention last October, “will require significant revisions to operational processes and policies across the industry.”

Rick Hill, MBA Vice President of Industry Technology, said MBA and MISMO have actively engaged with the industry to identify potential implementation issues ahead of the multiyear transition, and both organizations will continue to engage with members and provide necessary feedback to FHFA.

“MBA has encouraged FHFA and the GSEs to consider the entire mortgage ecosystem – not just GSE processes – in the implementation plan,” Hill said. “We encourage our members to provide feedback on all aspects of the plan and timeline directly to FHFA and the GSEs, via the survey.”

A link to the survey can be found here.