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FHFA’s Analysis of Credit Score Models Was Consistent with Applicable Requirements but the Agency Could Improve Its Process and Enhance the Level of Detail in Its Decision Record

Submitting OIG: 
Federal Housing Finance Agency OIG
Date Issued: 
Thursday, March 28, 2024
Agency Reviewed / Investigated: 
Federal Housing Finance Agency
Submitting OIG-Specific Report Number: 
EVL-2024-002
Location(s): 
Agency-Wide
Type of Report: 
Inspection / Evaluation
Questioned Costs: 
$0
Funds for Better Use: 
$0
Number of Recommendations: 
4
Report updated under NDAA 5274: 
No
View Document: 
AttachmentSize
PDF icon EVL-2024-002redacted.pdf460.93 KB

Related Open Recommendations

Recommendation Number Recommendation Status Significant Recommendation Additional Details
EVL-2024-002-1 Open No
FHFA should define the role and responsibilities of FHFA personnel involved in the review of the proposed determinations submitted by the Enterprises, including personnel from the Division of Enterprise Regulation, with respect to performing and documenting the evaluation of the impact of a change in credit score models required by section 1254.8(d) of the Regulation and the review and Agency decision required by section 1254.9(a).
EVL-2024-002-2 Open No
FHFA should clearly document in the decision record FHFA’s conclusion that any credit score model the Agency approves is consistent with the safe and sound operation of the Enterprises. Such a step would better demonstrate FHFA’s fulfillment of its responsibility under the Economic Growth Act and the Regulation.
EVL-2024-002-3 Open No
FHFA should clarify the extent to which FHFA expects the Enterprise Business Assessments to discuss the impact of a new credit score model or models on the Enterprises’ operations and risk management in terms of FHFA’s prudential management and operations standards and relevant governance regulations. To ensure that the Enterprises evaluate the impact of a new credit score model relative to the Agency’s prudential standards and risk management requirements, FHFA should explain what it means by “in accordance with” in this context.
EVL-2024-002-4 Open No
FHFA should require the Enterprises to include in their proposed determinations: (a) explicit statements that a credit score model did or did not pass the Enterprise Business Assessment, (b) the specific criteria in section 1254.8(b) that the model did not pass, and (c) the reasons for disapproval of the application. This step would ensure that FHFA has the benefit of relevant and meaningful details when it conducts its independent analysis under section 1254.8(d).
Displaying 4 of 4 Recommendations