Government-sponsored enterprises (GSEs) Fannie Mae again Freddie Mac announced this week that the planned transition from a “tri-merge” credit model – which requires credit reports to be issued by all three major agencies – to a “double-merge” model that will require only two to be tied to the other, new. Credit score requirements currently have no implementation timeline.
“[T]his use of the double-compounding option coincides with the retirement of Classic FICO,” the GSEs said in their joint Enterprise Credit Score and Credit Reports, updated Thursday. In the section giving the proposed implementation timeline, these are listed as “TBD.”
I Federal Housing Finance Agency (FHFA) originally planned to finish collecting industry feedback on the change to the dual consolidation system in the second quarter of 2023, and was set to implement the dual consolidation system in the first quarter of 2024. That timeline also called for FHFA to begin filing and disclosures FICO 10t again VantageScore Historical data for credit models 4.0 to support credit model updates through the first quarter of 2025.
By the fourth quarter of 2025, the FHFA would incorporate updates to the credit scoring model into fees and charges. But in late 2023, the FHFA announced a delay in the implementation of the bi-merge program citing industry concerns, and said it would gather more feedback on the change. Some lawmakers also addressed concerns about the change directed at FHFA Director Sandra Thompson at the 2023 congressional hearing.
Republicans in Congress it also tried to cobble together a triple-merger plan into law last year, but it didn’t progress beyond referral to the House Financial Services Committee.
In early 2024, the FHFA announced that its transition to the new credit requirements is expected to begin in Q4 2025, when the GSEs plan to begin receiving single-family loans based on FICO 10T and a VantageScore of 4.0, withdrawing the long-term credit score of -Classic FICO. This is also where the tri-merge to bi-merge transition is set to work.
However, now, the GSEs say that the implementation of double reporting, which they call “optional,” as well as the calculation of new mandatory credit scores and the inclusion of “new credit scoring model requirements in mortgage lending processes,” will be decided.
Immediately after the announcement, the Community Home Lenders of America (CHLA) issued a statement expressing gratitude for the delay.
“CHLA appreciates this delay in implementation of the GSE’s dual merger policy,” said Rob Zimmer, the organization’s director of external affairs.
“While it was conceived with a lot of good thought and work, this requirement was planned to happen at a time when credit score costs have increased more than 700% since the end of 2022. like FHA and VA loans, they were defaulting,” Zimmer added.
Zimmer wrote a white paper from CHLA on the topic of credit scores in 2024, saying at the time that “FHFA should retain the triple bottom line and allow the lender and consumer to choose between FICO 10T and VantageScore 4.0, instead of requiring just one solution: bi-merge plus VantageScore 4.0.”
The path forward is clouded by a combination of a vague implementation timeline and the reality of a new, incoming presidential administration. Thompson is expected to step down from his role as FHFA director on Jan. 19, one day before President-elect Donald Trump takes office. This week, Trump nominated private equity magnate Bill Pulte to serve as his successor.
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