FHFA Closer to Concluding Credit Score Model Review for GSEs

The Federal Housing Finance Agency intends to conclude its process of evaluating competing scoring models for potential adoption by Fannie Mae and Freddie Mac (“GSEs”) in 2016, according to an article in National Mortgage News. The agency began reviewing credit scoring models offered by Fair Isaac Corp. (“FICO”) and VantageScore early in 2015.

The GSEs currently use the FICO 4 credit scoring model which was released in 2004. According to the article, the most recent model FICO 9 was released in late 2014 and will be more predictive when it comes to scoring borrowers' capacity to manage debt. “A more predictive score will tend to allow lenders to be able to underwrite more consumers,” said Joanne Gaskin, senior director for scores and analytics at FICO. The agency is continuing to talk with a broad range of stakeholders.

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