Tried and true has won
out over shiny and new, at least when it comes to GSE credit scoring. And at
least for the moment.

The Federal Housing
Finance Agency (FHFA) announced on Tuesday that it has validated and reapproved
the Classic FICO credit score model
for use by Fannie Mae and Freddie Mac for
assessing the creditworthiness of mortgage borrowers. The Agency said this
would allow the GSEs “to continue supporting the mortgage market while
assessing more modern credit score models that were submitted in response to
the 2020 Joint Enterprise Credit Score Solicitation.”

That solicitation was
issued jointly by the GSEs In February. They were seeking possible alternatives
to the model which has, for years, been the only credit score they accepted. The
major credit agencies, Equifax, TransUnion, and Experian, have fought for years
to gain entry to the GSE market, including taking the matter to court.

Both GSEs had said the
solicitation itself was merely the first of four phases described in the FHFA
final rule on the validation and approval of third-party credit score model(s)
that the GSEs can use. Its deadline for submissions of contenders was September
15 which brought the GSEs and their regulator hard up against the November 20
deadline imposed for the credit model decision by the 2018 Economic Growth, Regulatory
Relief, and Consumer Protection Act.

FHFA called the approval of the FICO
product an incremental step in meeting the requirements of the Act. It said it
expects it will take the GSEs an additional year to complete the validation and
approval process of the remaining credit score models submitted in response to
the solicitation. 

By Jann Swanson , dated 2020-11-12 11:08:55

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Courtesy of Mortgage News Daily

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