The GSE regulator should direct Fannie Mae and Freddie Mac to use the same credit underwriting standards in their automated underwriting systems, according to the Mortgage Bankers Association.
The AU systems for “both GSEs have always been black boxes masking their standards from their customers,” the MBA says in a
As competitors, the GSEs employ different credit standards and even granted exceptions and variances for their largest customers.
The MBA wants the Federal Housing Finance Agency to set the parameters for acceptable underwriting criteria for both GSEs so they are transparent to lenders. That would give lenders clarity about the full extent of the credit box.
The FHFA should require Fannie and Freddie to “synchronize their underwriting engines by yearend for all mortgage terms and products offered,” MBA says.
At a time when policymakers are trying to attract private capital into the mortgage market, “it does not make sense to sense to have multiple credit models from government-backed entities competing in the market,” the MBA paper says.
