FHFA Delays Credit Score and Reporting Transition to End of 2025
Written By: Joel Palmer, Op-Ed Writer
The Federal Housing Finance Agency (FHFA) expects to transition to new crediting reporting requirements and new credit score models in the fourth quarter of 2025.
“Following extensive stakeholder engagement and input, FHFA is aligning the implementation date of the bi-merge credit reporting requirement with the transition from the Classic FICO credit score model,” the agency said in a statement.
In October 2022, FHFA announced the validation and approval of the FICO 10T and VantageScore 4.0 credit score models for use by the Enterprises to replace the Classic FICO model. The announcement also included a plan to transition from a three credit report requirement to two reports — known as bi-merge credit reporting — for single-family loans acquired by Fannie Mae and Freddie Mac.
In March 2023, FHFA said it expected to initiate the credit reporting change in the first quarter of this year. That transition was delayed after industry feedback.
The March 2023 plan also stated that the new credit score models would occur over two phases, which full incorporation occurring by the fourth quarter of 2025.
Now both transitions are expected to occur in the fourth quarter of next year.
“Synchronizing bi-merge credit reporting with the implementation of the new credit score model requirements will reduce complexity for market participants, which is a key objective of our transition efforts,” said FHFA Director Sandra L. Thompson.
FHFA said the enterprises will accelerate publication of VantageScore 4.0 historical data. It was originally scheduled to be published in the first quarter of 2025. It is now expected to occur in the third quarter of 2024.
Providing data on FICO 10T “is contingent upon achieving the necessary conditions for acquisition and publication of this data,” the agency said, adding that it will provide further details on implementation timing for FICO 10T once this process is complete.
“The release of historical data on tens of millions of Enterprise loan acquisitions affirms the commitment of FHFA and the Enterprises to a robust, transparent implementation process,” said Thompson.
“In recent public forums hosted by FHFA, stakeholders have emphasized the importance of this historical data to allow them to analyze the new models, as well as bi-merge credit reporting, and assess any changes they must make to their systems and models. Stakeholders have also shared perspectives on the efficiencies associated with aligning the option for bi-merge credit reporting with the transition from Classic FICO,” FHFA said.
FHFA also announced last week that the Housing Trust Fund and Capital Magnet Fund will receive approximately $301 million for affordable housing initiatives from Fannie Mae and Freddie Mac.
The Housing Trust Fund, overseen by the U.S. Department of Housing and Urban Development, will receive $196 million. It allocates funding annually to states and state-designated entities to produce or preserve affordable housing through the acquisition, new construction, reconstruction, and/or rehabilitation of non-luxury housing.
The Capital Magnet Fund, overseen by the U.S. Department of the Treasury, will receive $105 million. It awards money to finance affordable housing activities, related economic development activities, and community service facilities.
By law, amounts allocated to these funds are based on the Enterprises’ new business purchases. Market conditions in 2023, including elevated interest rates, reduced the Enterprises’ total new business purchases compared to the previous year.
About the Author
As an NAMP® Opinion Editorial Contributor, Joel Palmer is a freelance writer who spent 10 years as a business and financial reporter and another 10 years in marketing for the insurance and financial services industries. He regularly writes about the mortgage industry, as well as residential and commercial real estate, investments, and retirement income planning. He has also ghostwritten books on starting a business, marketing, and retirement income planning.
