I 

114TH CONGRESS 

1ST SESSION H. R. 4211 

To require Fannie Mae and Freddie Mac to establish procedures for considering certain credit scores in making a determination whether to purchase 

a residential mortgage, and for other purposes. 

IN THE HOUSE OF REPRESENTATIVES 

DECEMBER 10, 2015 

Mr. ROYCE (for himself and Ms. SEWELL of Alabama) introduced the 

following bill; which was referred to the Committee on Financial Services 

A BILL 

To require Fannie Mae and Freddie Mac to establish procedures for considering certain credit scores in making 

a determination whether to purchase a residential mortgage, and for other purposes. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Credit Score Competi5 tion Act of 2015’’. 

6 SEC. 2. CREDIT SCORE VALIDATION; VALIDATION PROCESS. 

7 (a) USE OF CREDIT SCORES BY FANNIE MAE IN

8 PURCHASING RESIDENTIAL MORTGAGES.—Subsection (b) 


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1 of section 302 of the Federal National Mortgage Associa2 tion Charter Act (12 U.S.C. 1717(b)) is amended by add3 ing at the end the following new paragraph: 

4 ‘‘(7)(A) USE OF CREDIT SCORES.—The corporation 

5 may condition its purchase of a residential mortgage 

6 under this section on the provision of a credit score for 

7 the borrower only if— 

8 ‘‘(i) the credit score is derived from any credit 

9 scoring model that has been validated and approved 

10 by the corporation under this paragraph; 

11 ‘‘(ii) the corporation has established and made 

12 publicly available a description of the process the 

13 corporation will use to validate and approve credit 

14 scoring models, which process shall comply with any 

15 standards and criteria established by the Director of 

16 the Federal Housing Finance Agency pursuant to 

17 section 1328 of the Federal Housing Enterprises Fi18 nancial Safety and Soundness Act of 1992; and 

19 ‘‘(iii) the corporation provides for the use of 

20 such credit score by all of its automated under21 writing systems and any other procedures and sys22 tems used to purchase residential mortgages. 

23 ‘‘(B) VALIDATION AND APPROVAL PROCESS.—The 

24 process described in subparagraph (A)(ii) shall include an 

25 evaluation of— 


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1 ‘‘(i) the criteria used to validate and approve a 

2 credit scoring model, including measures of the in3 tegrity, reliability, and accuracy of such model, and 

4 an assurance that such model is consistent with the 

5 safe and sound operation of the corporation; and 

6 ‘‘(ii) the data necessary for the validation of the 

7 credit scoring model. 

8 ‘‘(C) APPLICATION.—If the corporation elects to use 

9 a credit score under this paragraph, the corporation shall 

10 solicit applications from developers of credit scoring mod11 els for the validation and approval of such models under 

12 the process described in subparagraph (A)(ii). 

13 ‘‘(D) TIMEFRAME FOR DETERMINATION; NOTICE.— 

14 ‘‘(i) IN GENERAL.—The corporation shall estab15 lish a date before which the corporation shall make 

16 a determination with respect to any application sub17 mitted under subparagraph (C) and provide notice 

18 of such determination to the applicant. Such date 

19 shall not be later than 180 days after the date on 

20 which an application is submitted to the corporation. 

21 ‘‘(ii) EXTENSIONS.—The Director of the Fed22 eral Housing Finance Agency may authorize up to 

23 2 extensions of the date established under clause (i), 

24 each of which shall not exceed 30 days, upon the 


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1 written request and a showing of good cause by the 

2 corporation. 

3 ‘‘(iii) STATUS NOTICE.—The corporation shall 

4 provide notice to an applicant regarding the status 

5 of an application submitted under subparagraph (C) 

6 not later than 60 days after the date on which the 

7 application was submitted to the corporation. 

8 ‘‘(iv) REASONS FOR DISAPPROVAL.—If an appli9 cation is disapproved, the corporation shall provide 

10 to the applicant the reasons for the disapproval not 

11 later than 30 days after a determination is made 

12 under this subparagraph. 

13 ‘‘(E) AUTHORITY OF DIRECTOR.—If the corporation 

14 elects to use a credit score under this paragraph, the Di15 rector of the Federal Housing Finance Agency shall re16 quire the corporation to routinely update the validation 

17 and approval process described in subparagraph (A)(ii) as 

18 the Director, in the Director’s discretion, deems to be nec19 essary to ensure such process remains appropriate and 

20 adequate and complies with any standards and criteria es21 tablished pursuant to section 1328 of the Federal Housing 

22 Enterprises Financial Safety and Soundness Act of 1992. 

23 ‘‘(F) CREDIT SCORE DEFINED.—In this paragraph, 

24 the term ‘credit score’ means a numerical value or a cat25 egorization derived from a statistical tool or modeling sysVerDate Sep 11 2014 06:04 Dec 11, 2015 Jkt 059200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\H4211.IH H4211

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1 tem used by a person who makes or arranges a loan to 

2 predict the likelihood of certain credit behaviors, including 

3 default.’’. 

4 (b) USE OF CREDIT SCORES BY FREDDIE MAC IN

5 PURCHASING RESIDENTIAL MORTGAGES.—Section 305 of 

6 the Federal Home Loan Mortgage Corporation Act (12 

7 U.S.C. 1454) is amended by adding at the end the fol8 lowing new subsection: 

9 ‘‘(d)(1) USE OF CREDIT SCORES.—The Corporation 

10 may condition its purchase of a residential mortgage 

11 under this section on the provision of a credit score for 

12 the borrower only if— 

13 ‘‘(A) the credit score is derived from any credit 

14 scoring model that has been validated and approved 

15 by the Corporation under this subsection; 

16 ‘‘(B) the Corporation has established and made 

17 publicly available a description of the process the 

18 corporation will use to validate and approve credit 

19 scoring models that, which process shall comply with 

20 any standards and criteria established by the Direc21 tor of the Federal Housing Finance Agency pursu22 ant to section 1328 of the Federal Housing Enter23 prises Financial Safety and Soundness Act of 1992; 

24 and 


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1 ‘‘(C) the Corporation provides for use of such 

2 credit score by all of its automated underwriting sys3 tems and any other procedures and systems used to 

4 purchase residential mortgages. 

5 ‘‘(2) VALIDATION AND APPROVAL PROCESS.—The 

6 process described in paragraph (1)(B) shall include an 

7 evaluation of— 

8 ‘‘(A) the criteria used to validate and approve 

9 a credit scoring model, including measures of the in10 tegrity, reliability, and accuracy of such model and 

11 an assurance that such model is consistent with the 

12 safe and sound operation of the Corporation; and 

13 ‘‘(B) the data necessary for the validation of 

14 the credit scoring model. 

15 ‘‘(3) APPLICATION.—If the Corporation elects to use 

16 a credit score under this subsection, the Corporation shall 

17 solicit applications from developers of credit scoring mod18 els for the validation and approval of such models under 

19 the process described in paragraph (1)(B). 

20 ‘‘(4) TIMEFRAME FOR DETERMINATION; NOTICE.— 

21 ‘‘(A) IN GENERAL.—The Corporation shall es22 tablish a date before which the Corporation shall 

23 make a determination with respect to any applica24 tion submitted under paragraph (3) and provide no25 tice of such determination to the applicant. Such 


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1 date shall not be later than 180 days after the date 

2 on which an application is submitted to the Corpora3 tion. 

4 ‘‘(B) EXTENSIONS.—The Director of the Fed5 eral Housing Finance Agency may authorize up to 

6 2 extensions of the date established under subpara7 graph (A), each of which shall not exceed 30 days, 

8 upon the written request and a showing of good 

9 cause by the Corporation. 

10 ‘‘(C) STATUS NOTICE.—The Corporation shall 

11 provide notice to an applicant regarding the status 

12 of an application submitted under paragraph (3) not 

13 later than 60 days after the date on which the appli14 cation was submitted to the corporation. 

15 ‘‘(D) REASONS FOR DISAPPROVAL.—If an ap16 plication is disapproved, the corporation shall pro17 vide to the applicant the reasons for the disapproval 

18 not later than 30 days after a determination is made 

19 under this paragraph. 

20 ‘‘(5) AUTHORITY OF DIRECTOR.—If the Corporation 

21 elects to use a credit score under this subsection, the Di22 rector of the Federal Housing Finance Agency shall re23 quire the Corporation to routinely update the validation 

24 and approval process described in paragraph (1)(B) as the 

25 Director, in the Director’s discretion, deems to be necVerDate Sep 11 2014 06:04 Dec 11, 2015 Jkt 059200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\H4211.IH H4211

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1 essary to ensure such process remains appropriate and 

2 adequate and complies with any standards and criteria es3 tablished pursuant to section 1328 of the Federal Housing 

4 Enterprises Financial Safety and Soundness Act of 1992. 

5 ‘‘(6) CREDIT SCORE DEFINED.—In this subsection, 

6 the term ‘credit score’ means a numerical value or a cat7 egorization derived from a statistical tool or modeling sys8 tem used by a person who makes or arranges a loan to 

9 predict the likelihood of certain credit behaviors, including 

10 default.’’. 

11 SEC. 3. AUTHORITY OF DIRECTOR OF THE FEDERAL HOUS12 ING FINANCE AGENCY. 

13 Subpart A of part 2 of subtitle A of the (12 U.S.C. 

14 4541 et seq.) is amended by adding at the end the fol15 lowing new section: 

16 ‘‘SEC. 1328. REGULATIONS FOR USE OF CREDIT SCORES. 

17 ‘‘The Director may, by regulation, establish stand18 ards and criteria for any process used by an enterprise 

19 to validate and approve credit scoring models pursuant to 

20 section 302(b)(7) of the Federal National Mortgage Asso21 ciation Charter Act and section 305(d) of the Federal 

22 Home Loan Mortgage Corporation Act.’’. 


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1 SEC. 4. EFFECTIVE DATE. 

2 The amendments made by this Act shall take effect 

3 180 days after the date of enactment of this Act. 

Æ 


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