WASHINGTON–The Federal Housing Finance Agency last week said it is partnering with Fannie Mae and Freddie Mac to assess the feasibility of allowing lenders to use an alternative credit scoring model when determining a borrowers’ creditworthiness.
In a new report, the FHFA noted that Freddie Mac said it continues to find some borrowers are challenged in obtaining a mortgage due to inadequate information about their credit score or knowledge of its importance.
The report includes suggestions for improving access to credit for borrowers, helping borrowers to minimize or avoid the impact of foreclosures, and increasing support affordable multifamily lending. The report details the GSEs’ credit risk transfer programs and other activities meant to increase the role of private capital in the secondary mortgage market and the work accomplished so far to develop the Common Securitization Platform and a Single Security.
The FHFA noted it has recently initiated an independent dispute resolution process for repurchase disputes, allowing lenders to submit unresolved loan-level disputes to neutral third-party arbitrators after the appeal and escalation processes have been exhausted. The disputes center on financial institutions being required to repurchase defective loans that were sold to the GSEs during the run-up to the financial crisis.
NAFCU has called on the FHFA to ensure that any existing GSE securities held by credit unions do not lose their marketability upon the introduction of Common Securitizations Solutions, the Single Security structure.