Joint Letter to FHFA on the Release of Historical Credit Score Data

Dear Director Thompson,

On behalf of the American Bankers Association, Housing Policy Council, Independent Community Bankers of America, Mortgage Bankers Association, and U.S. Mortgage Insurers, we are writing in advance of the publication of the VantageScore 4.0 historical dataset that the Federal Housing Finance Agency (FHFA) announced plans to release early in the 3rd quarter of 2024. Based on our understanding of what Fannie Mae and Freddie Mac (the GSEs) anticipate including in the release, our members have expressed concerns that the information will be insufficient to meet their data analytics needs.

We hope that by providing early, proactive, and constructive feedback to FHFA and the GSEs, there will be adequate time to augment the data made available in the planned 3Q 2024 data release as well as in any subsequent data release. Providing these additional critical data elements with the initial data release will allow our members to begin their analysis upon publication. It is important for the industry to be in a position to take this first step towards meeting FHFA's goal for a Q4 2025 implementation date for the VantageScore change (with FICO 10T concurrent or subsequent implementation presumed to be dependent on the timing of that dataset’s publication).

Reiterating the Importance of Historical Data at Various Points in the Economic Cycle

It is our collective understanding that the VantageScore dataset will include information going back to 2013. Moreover, we understand that FHFA was comfortable approving VantageScore 4.0 for use by the GSEs based on limited historical data. Many industry participants have raised concerns about this, given that the data was generated during a time when the housing market was appreciating, and unemployment was declining to historic lows. Our members continue to believe that it is imperative to have credit reporting data "through the cycle" back to 2003 given the sensitivity of mortgage default and prepayment to origination credit scores.

The correlation between credit scores and mortgage performance has proven to vary significantly over economic cycles. Some industry participants have relayed the related concern that the use of models calibrated to only the post financial crisis period would not likely meet prudential regulatory standards or internal requirements for model validation with which they must comply.

Download the joint comment letter to read the full text.