The Federal Housing Finance Agency (FHFA) did an about face by announcing it will not make a decision this year about updating the credit score model used by Fannie Mae and Freddie Mac. Instead of fulfilling its original plan, the agency stated it would focus on implementating of Section 310 of the Economic Growth, Regulatory Relief, and Consumer Protection Act (Public Law 115-174) that was enacted in May.
Section 310 requires the FHFA to use its rulemaking to define the standards and criteria that the government-sponsored enterprises use to validate credit score models. The FHFA had been examining the potential impact of a new credit score model as part of its Conservatorship Scorecard Initiative, which attracted feedback from more than 100 stakeholders as part of a Request for Input.
"After careful evaluation, we have determined that proceeding with efforts to reach a decision based on our Conservatorship Scorecard Initiative process and timetable would be duplicative of, and in some respects inconsistent with, the work we are mandated to do under Section 310 of the Act," said FHFA Director Mel Watt. "In light of that, we are communicating to Congress that we are transferring our full efforts to working with the Enterprises to implement the steps required under Section 310. These steps include developing a proposed rule, receiving and evaluating public comment on the proposed rule and issuing a Final Rule to govern the verification of credit score models. Thereafter, we will follow through on the steps required to implement the new Rule."