FHFA still eyeing 2019 for implementation of new credit score model
WASHINGTON — Anyone hoping that the Federal Housing Finance Agency will suddenly accelerate the introduction of a new credit score model was likely disappointed by the release of a report Thursday.
The annual progress report on the Fannie Mae and Freddie Mac conservatorships reiterated the FHFA's projection that the agency will not set an implementation date for a new credit score model until after the launch of a new Single Security Initiative. The single security is slated for June 3, 2019.
Fannie and Freddie currently use a credit scoring model introduced by Fair Isaac in 2003 known as FICO 5, but the FHFA has been moving toward updating the government-sponsored enterprises' credit scoring models for the last several years. The FHFA is considering whether to endorse the new FICO 9 or VantageScore 3.0 models, or a combination of the two of them.
"While FHFA believes that it would be desirable to update the Enterprises’ credit score requirement from the current Classic FICO standard, FHFA has not determined which credit score option should be adopted as a replacement," according to FHFA's 2017 Scorecard Progress report.
The GSE regulator will be evaluating industry comments on using the latest FICO or VantageScore credit scoring models. Comments are due March 30.
"FHFA will evaluate all responses to the RFI, along with supporting analysis and outreach, and plans to make a decision on updating the Enterprises’ credit score requirements in 2018," the report said. "Any implementation date related to updated credit score models will, however, be delayed until after the implementation of the Single Security Initiative."
The FHFA report also shows Fannie Mae and Freddie Mac are continuing to reduce their inventories of real estate owned properties. "Overall, the Enterprises reduced their REO property inventories by over 30 percent in 2017, with a total decline of 14,901 properties to 34,610 properties," the report says.