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NAFCU, trades urge FHFA to be transparent on data related to credit score models
NAFCU and CUNA, along with several financial trade associations, wrote to Federal Housing Finance Agency (FHFA) Director Sandra Thompson to request that the agency be transparent with its data and analyses regarding credit scoring models and the shift to bi-merge reporting.
“As a critical first step of the implementation process, we ask that FHFA provide its analysis as well as the data and findings from the Enterprises’ comprehensive testing and assessment,” wrote the organizations. “Transparency into these analyses and assessment findings will greatly enhance and facilitate productive implementation planning discussions in FHFA’s and the Enterprises’ ongoing public engagement sessions.”
In addition, the groups noted that the results from the tests performed by the government-sponsored enterprises (GSEs) – Fannie Mae and Freddie Mac – would:
- provide insight on how the new scores reflect a borrower’s ability to repay;
- support the reliability and accuracy of how the scores perform through different economic cycles;
- confirm the integrity and comprehensiveness of the data used to capture a borrower’s credit history and calculate a representative credit score; and
- provide a sample framework for how the FHFA and the GSEs conducted their analyses and could be used for supplemental support in gaining acceptance of these new models with regulators, rating agencies, and other oversight entities.
“We urge FHFA and the Enterprises to release the full scope of results from the Enterprises’ testing as it would provide the industry with beneficial information that would aid in the preparation for implementation and enhance analysis that stakeholders will soon undertake,” concluded the groups. “We believe that transparency in this area would help facilitate a smooth and effective implementation process that would minimize market disruption.”
NAFCU will continue to engage the FHFA to ensure credit unions can provide safe, sustainable, and equitable housing for all communities.