FIRST ON FOX: A coalition of advocacy groups is urging the Trump administration’s housing regulator to proceed cautiously with changes to mortgage credit score rules, warning they could increase the risk of another taxpayer-funded housing bailout.
In a letter to Bill Pulte, director of the Federal Housing Finance Agency, the 35 groups laid out three points to address as the Trump administration works to make homes more affordable nationwide.
1. Careful rollout of competing credit score models
The administration’s plan to let lenders choose between traditional and new credit score models must be handled carefully. The group warned that poorly designed changes could complicate mortgage lending, distort pricing and weaken the financial footing of Fannie Mae and Freddie Mac.
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2. Simultaneous availability of credit score models
The group said all new credit score models should be rolled out at the same time, warning that staggered implementation could increase costs for taxpayers, lenders and borrowers and make it harder to accurately assess mortgage risk.
3. Public release of validation and approval data
The group also asked that the agency release previously undisclosed data used to evaluate new credit score models, saying greater transparency would help lenders and other stakeholders transition to the new system.
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The group warned that previous administrations rushed into policies that pushed unprepared borrowers into homeownership, contributing to widespread mortgage defaults.
“Too often in the past, families not yet ready to become homeowners have been pushed into it by government regulatory, fiscal and monetary policies. The result was the 2008 financial crisis, largely driven by many bad mortgages failing at once,” the group wrote.
The advocacy groups pointed to the sweeping defaults which “triggered a cascade of events that eventually led to multiple taxpayer bailouts.”
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“We are sure you agree that this crisis should never happen again. This risk is particularly acute now, as recent data indicate that mortgage delinquencies are trending upward,” the group added.
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