On July 31st, 2023 a bi-partisan group of Congressional Representatives wrote to the Director of the Federal Housing Finance Agency, in essence, demanding that the FHFA keeps their deadline in the implementation of VantageScore 4.0 and FICO 10T for determining credit scoring factors in gaining a Home Mortgage Loan. FICO has been the standard bearer with Fannie Mae and Freddie Mac for decades as the only model used to determine if an individual can qualify for a Mortgage Loan. However, in May of 2018 the Agency (FHFA) and the Entities (Fannie Mae and Freddie Mac) were directed, by law, to move to adopt a scoring model that “enhance credit-scoring competition and improve financial inclusion within our housing markets by validating and updating the credit scoring models used by the Enterprises.”
The letter to the Director states; “ Homeownership is a foundational pillar of the American Dream and Congress expects the Agency, the Enterprises, and all mortgage market stakeholders to move with urgency to comply with the Credit Scoring Competition Act of 2018, encapsulated as Section 310 of the “Economic Growth, Regulatory Relief, and Consumer Protection Act” (S. 2155, 115th Congress) and signed into law on May 24, 2018, by end of year 2025, if not earlier.” These Congressmen go on to state, FHFA is called to have “full implementation by Q4 of 2025 – a full seven and a half years after Congress and the President implemented the law, which is more than enough time for the mortgage market to comply with the regulation.”
“Congress knows that competition within the financial services sector benefits all. Our constituents that are awaiting an opportunity to purchase a home can accept no further delay in the implementation of new credit scores in the mortgage market. Every day of delay in this process is another day that working people who pay their bills on time are unable to get a mortgage, finance a higher education, or take out a small business loan – that’s a real human cost.”
It is the hope that this implementation will come much sooner than later. It’s been proven time and time again that a monopoly is only good… for the monopoly. Competition is a great thing and can help level the playing field, much to the benefit of the consumer.
