Royce Targets GSEs on FICO-Only Credit Scoring – NMP Skip to main content

Royce Targets GSEs on FICO-Only Credit Scoring

Phil Hall
Dec 14, 2015
After successfully pushing through bipartisan legislation that capped the salaries of the government-sponsored enterprise (GSE) chief executives, Rep. Ed Royce (R-CA) is taking a new aim at Fannie Mae and Freddie Mac with a bill that would change the GSE

After successfully pushing through bipartisan legislation that capped the salaries of the government-sponsored enterprise (GSE) chief executives, Rep. Ed Royce (R-CA) is taking a new aim at Fannie Mae and Freddie Mac with a bill that would change the GSE credit scoring process.

Rep. Royce, together with Rep. Terri Sewell (D-AL), has introduced HR 4211, the Credit Score Competition Act of 2015, which will allow the GSEs to use other credit scoring models besides FICO. Royce and Sewell based their legislation on the problems faced by would-be homebuyers—mostly low- and middle-income Americans—that have the wherewithal to responsibly pursue homeownership but are disqualified from consideration to a low or non-existent FICO score. The represents also noted that the GSEs maintain a near-monopoly on the secondary market and relying on FICO solely reinforces this dominance.

“The GSEs' use of a single credit score is an unfair practice that stifles competition and innovation in credit scoring,” said Rep. Royce. “Breaking up the credit score monopoly at Fannie and Freddie will also assist them in managing their credit risk and decreases the potential for another taxpayer bailout.”

“Fannie Mae and Freddie Mac are the largest mortgage purchasers in the nation, but they rely on credit score models that don’t necessarily take into account something as simple as whether borrowers have paid their rent on time,” added Sewell. “Homeownership is an integral part of the American Dream that shouldn’t be out of the reach for low-income, rural, and minority borrowers who lack access to traditional forms of credit. This legislation takes an important step towards addressing this issue and helps make homeownership a reality for more Americans across the country.”

Published
Dec 14, 2015
Manufactured Housing: The New Affordable Alternative

While the housing market is grappling with widespread affordability and supply, manufactured homes are gaining ground as a new alternative. 

Industry News
Dec 03, 2021
Angel Oak Home Loans Opens 3 New Branches

Continues expansion in Western U.S. with new branches in California, Nevada & Utah.

Industry News
Dec 02, 2021
Open Mortgage Names New President

Joe Stephenson, formerly of American Advisors Group, to lead daily operations.

Industry News
Dec 01, 2021
Homepoint Expands Refinance Program Offerings

Now offers Freddie Mac’s new refinance option, Refi Possible, making it easier for many homeowners with a Freddie Mac-owned mortgage to reduce their interest rate.

Industry News
Nov 30, 2021
Non-QM Lender Deephaven Hires Business Development VP

Dallas-based Tim Fisher charged with growing Deephaven’s correspondent business In Texas and surrounding states

Industry News
Nov 30, 2021
Biden Reappoints Powell As Federal Reserve Chairman

A signal that The Fed will continue its policies as inflation surges and economic uncertainty spikes due to an emerging variant of the coronavirus. 

Industry News
Nov 29, 2021