On August 16, the Federal Housing Finance Agency issued a final rule on validation and approval of third-party credit score models that Fannie Mae and Freddie Mac use in deciding whether to purchase residential mortgage loans. The FHFA is the GSEs’ prudential regulator and, since 2008, has served as their conservator. In doing so, the FHFA satisfied its obligation to publish a framework for credit score model validation and approval required in section 310 of the Economic Growth, Regulatory Relief and Consumer Protection Act of 2018. Section 310 now requires each GSE to publish its description of its validation and approval process for evaluating applications from credit score model developers, consistent with the FHFA’s framework.
Read our client alert.