FHFA Seeks Comment on Third-Party Credit Score Models

FHFA Seeks Comment on Third-Party Credit Score Models

December 13, 2018
The City of Los Angeles suffered a legal setback when a three-judge panel of the U.S. 9th Circuit Court of Appeals ruled that the city failed to make a case against alleged mortgage lending discrimination
The Federal Housing Finance Agency (FHFA) is seeking public comment on a proposed rule to establish standards and criteria for the validation and approval of third-party credit score models that would be used by the government-sponsored enterprises (GSEs).
The proposed rule would establish a four-phase process for Fannie Mae and Freddie Mac to validate and approve credit score models: Solicitation of applications from credit score model developers, review of submitted applications, credit score assessment and enterprise business assessment. The GSEs are not required to use a third-party credit score model, but using this type of a model would require GSE approval based on the federal law and FHFA regulations.
The FHFA is also hosting a webinar on Jan. 9 at 1:00 p.m. EST to explain the proposed rule and answer questions regarding its contents.