Credit Cards Center Credit cards from our partners
Reply
Regular Contributor
Posts: 158
Registered: ‎08-14-2016
0

bill to end "FICO monopoly" at Fannie and Freddie

House reintroduces bill to end "FICO monopoly" at Fannie Mae and Freddie Mac

http://www.housingwire.com/articles/39163-house-reintroduces-bill-to-end-fico-monopoly-at-fannie-mae...
BK CH7 Discharged 03/2015
FICO8 EQ-657 TU-657 EX-665
Revolving credit lines 125k.
Valued Contributor
Posts: 2,372
Registered: ‎10-31-2011

Re: bill to end "FICO monopoly" at Fannie and Freddie

[ Edited ]

I'd be surprised if this went anywhere due to "credit risk" following the "everyone qualifies" LIAR loans that caused the mortgage crisis in 2006-08. While lenders can and do use their own models, there are many flavors of FICO and frankly it has a strong and long history of assessing lender risk. Let me look at little closer at the legislation, I'll edit this post after I actually look at the bill.

 

Edit Add: Overview: Bill Summary & Status

  • To require Fannie Mae and Freddie Mac to establish procedures for considering certain credit scores in making a determination whether to purchase a residential mortgage, and for other purposes

Only 2 co-sponsors, but it was just introduced yesterday- the full text is not online yet (takes 4-5 days), but one thing to note is that this bill would require these agencies to "consider" for purchase loans made using other than FICO scores - that loophole says that if a lender "qualifies" and issues a mortgage using whatever they term proper documentation to make the loan, that the agencies can "consider purchasing the loan". Frankly you need to find lenders that will actually make loans that don't use FICO scoring to even have it considered for purchase by the quasi-government agencies. Fly by night "everyone qualifies" loan companies already crashed and burned and requirements were revised as far as DTI, debt/asset documentation and other factors making it much harder post crash to qualify in the firsat place. I don't think Congress is in the mood to revisit substandard requirements after the last go round. Since FICO is the standard risk model, I don't see much support for reinventing the wheel after the last crash, especially since the agencies are not required to purchase the loans, just consider the possibility. Note too that Royce is on Financial Services, so it's his kind of bill, but note too that there is growing support in Congress to disband these housing agencies as no longer needs (on top of the compensation their top brass make)

 

An interesting twist is that both agencies are now "owned" by the USGov, mostly because of the housing bust, which means this bill would have the USGov buying "alternate qualified loans" that disregard standard risk scoring standards - I don't see the point.

 

https://en.wikipedia.org/wiki/Federal_takeover_of_Fannie_Mae_and_Freddie_Mac

 

There are a lot of bills introduced, during the 114th Congress (2015-16) about 6600 bills were introduced, just over 300 became law and that includes budget measures and naming Post Offices. The 115th Congress has been in session for just over 1 month and over 900 bills have been introduced so far - I won't go into the "why?"  

 

I'll keep an eye on it, thanks for posting the info.

 

 

Highlighted
Frequent Contributor
Posts: 454
Registered: ‎10-05-2012
0

Re: bill to end "FICO monopoly" at Fannie and Freddie

i agree with Pipe, this won't happen.

Forums posts are not provided or commissioned by FICO. Forums posts have not been reviewed, approved or otherwise endorsed by FICO. It is not FICO's responsibility to ensure all posts and/or questions are answered.

† Advertiser Disclosure: The listings that appear on myFICO are from companies from which myFICO receives compensation, which may impact how and where products appear on myFICO (including, for example, the order in which they appear). myFICO does not review or include all companies or all available products.
‡ Credit cards for FICO Score ranges: The score ranges are guidelines based on internal myFICO analysis of actual applicant approvals, and having a FICO Score in a particular range does not guarantee you will be approved for credit cards recommended in that range. These ranges were not provided by any card issuer.

* For complete information, see the terms and conditions on the credit card issuer’s website. Once you click apply for this card, you will be directed to the issuer’s website where you may review the terms and conditions of the card before applying. While myFICO always strives to present the most accurate information, we show a summary to help you choose a product, not the full legal terms - and before applying you should understand the full terms of products as stated by the issuer itself.

Copyright ©2001-2015 Fair Isaac Corporation. All rights reserved.   | Terms of Use | Privacy Policy | Sitemap

IMPORTANT INFORMATION: All FICO® Score products made available on myFICO.com include a FICO® Score 8, along with additional FICO® Score versions. Your lender or insurer may use a different FICO® Score than the versions you receive from myFICO, or another type of credit score altogether. Learn more

FICO, myFICO, Score Watch, The score lenders use, and The Score That Matters are trademarks or registered trademarks of Fair Isaac Corporation. Equifax Credit Report is a trademark of Equifax, Inc. and its affiliated companies. Many factors affect your FICO Score and the interest rates you may receive. Fair Isaac is not a credit repair organization as defined under federal or state law, including the Credit Repair Organizations Act. Fair Isaac does not provide "credit repair" services or advice or assistance regarding "rebuilding" or "improving" your credit record, credit history or credit rating. FTC's website on credit.