FHFA Credit Score Model Needs Adequate Cost-benefit Analysis, CUNA says

March 21, 2019


Alex McVeigh -- CUNA Communications; (202) 508-6767;

WASHINGTON (March 21, 2019) -- Credit Union National Association (CUNA) sent a letter Thursday to the Federal Housing Finance Agency (FHFA) on the validation and approval of credit score models.

CUNA’s letter applauds FHFA for acknowledging the need for cost-benefit analysis as a core component of its proposed validation and approval process. However, it is concerned that the proposed cost-benefit analysis is “far from adequate,” as it only vaguely mentions lender implementation costs as a factor for consideration.

“Ultimately, it is critical that the FHFA’s final rule strike the appropriate balance between increasing competition in the credit-score market, preserving competition in the lender market by not, unintentionally, decreasing smaller lenders’ access to liquidity from the secondary market due to increased costs, and ensuring both consumers and lenders have certainty and predictability about the use of credit scores in their conventional mortgage decisions,” the letter reads. “That balance can only be properly achieved by requiring a robust cost-benefit analysis that includes pricing impact on lenders,” the letter adds.”

CUNA believes that increased market competition in the credit-score industry could be beneficial to both consumers and lenders because it can improve efficiency, decrease pricing and potentially expand the market of consumers for mortgage products.

But CUNA also acknowledges that the frequent modification of the GSEs credit-scoring models or a requirement that they use multiple models at the same time could discourage competition in the lending market by increasing costs for smaller lenders less capable of quickly and cost-effectively absorbing those changes into their own underwriting systems.

CUNA President/CEO Jim Nussle sent a letter in February to the Senate Banking Committee outlining several housing finance system principles that the new Director of the FHFA should look to prioritize including equal access, affordability, reasonable and orderly transition, strong oversight and supervision, durability and preservation of what works in the current system.

Credit unions play an increasingly important role in the housing finance market and, as a result have a vested interest in the ongoing stability of the secondary mortgage market.

Read the letter in full here.


About CUNA:    
 Credit Union National Association (CUNA) is the only national association that advocates on behalf of all of America’s credit unions, which are owned by 115 million consumer members. CUNA, along with its network of affiliated state credit union leagues, delivers unwavering advocacy, continuous professional growth and operational confidence to protect the best interests of all credit unions. For more information about CUNA, visit To find your nearest credit union, visit