FHFA gives more flexibility to credit modernization timeline

The regulator overseeing Fannie Mae and Freddie Mac has introduced some new wiggle room into their deadline for modernizing credit reporting and scoring.

The Federal Housing Finance Agency in announcing the next stage of the project on Monday left open-ended the date for a planned transition that will give lenders the option to use reports from two rather than three companies on loans sold.

The FHFA said it now expects that "the implementation date for this bi-merge requirement will occur later than the first quarter 2024, as was initially proposed."

The first quarter of 2025 remains the end-date on the timeline, but the FHFA noted in its latest update that deadlines could change in the future, confirming previous statements it's made.

It also said it would offer more opportunities for public dialogue as stakeholders debate how fast the initiative should move forward. Some in the industry are urging deliberation to account for the way credit reporting and scoring is interwoven with a highly regulated mortgage process.

"FHFA's reformulated implementation plan is an acknowledgment of the significant operational complexities and the magnitude of this effort on the housing finance system," said Bob Broeksmit Bob Broeksmit, president and CEO of the Mortgage Bankers Association, in an emailed statement.

The Community Home Lenders of America said the additional opportunities for engagement FHFA and Director Sandra Thompson extended were welcome given mortgage industry concerns about the process.

"CHLA commends Director Thompson for announcing public listening sessions on the transition to updated credit score models and credit report requirements for loans," the CHLA's Scott Olson said in an emailed statement. Olson is CHLA's executive director.

VantageScore, one of the two entities providing the updated scores with the aim of identifying mortgage-ready borrowers that the current methodology overlooks, urged the FHFA not to delay the change that was legislatively mandated in 2018 beyond another two years. 

"We will assist all mortgage originators to get an immediate start using VantageScore 4.0," said Tony Hutchinson, senior vice president, industry and government relations, in an email. "Every day of delay is another day that working people who pay their bills on time are unable to get a mortgage."