I 

115TH CONGRESS 

1ST SESSION H. R. 898 

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 

FEBRUARY 7, 2017 

Mr. ROYCE of California (for himself, Ms. SINEMA, 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 2017’’. 

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 

9 credit scoring model that has been validated 

10 and approved by the corporation under this 

11 paragraph; 

12 ‘‘(ii) the corporation has established and 

13 made publicly available a description of the 

14 process the corporation will use to validate and 

15 approve credit scoring models, which process 

16 shall comply with any standards and criteria es17 tablished by the Director of the Federal Hous18 ing Finance Agency pursuant to section 1328 

19 of the Federal Housing Enterprises Financial 

20 Safety and Soundness Act of 1992; and 

21 ‘‘(iii) the corporation provides for the use 

22 of such credit score by all of its automated un23 derwriting systems and any other procedures 

24 and systems used to purchase residential mort25 gages. 


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

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

3 evaluation of— 

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

5 credit scoring model, including measures of the in6 tegrity, reliability, and accuracy of such model, and 

7 an assurance that such model is consistent with the 

8 safe and sound operation of the corporation; and 

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

10 credit scoring model. 

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

12 a credit score under this paragraph, the corporation shall 

13 solicit applications from developers of credit scoring mod14 els for the validation and approval of such models under 

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

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

17 ‘‘(i) IN GENERAL.—The corporation shall estab18 lish a date before which the corporation shall make 

19 a determination with respect to any application sub20 mitted under subparagraph (C) and provide notice 

21 of such determination to the applicant. Such date 

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

23 which an application is submitted to the corporation. 

24 ‘‘(ii) EXTENSIONS.—The Director of the Fed25 eral Housing Finance Agency may authorize up to 


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1 2 extensions of the date established under clause (i), 

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

3 written request and a showing of good cause by the 

4 corporation. 

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

6 provide notice to an applicant regarding the status 

7 of an application submitted under subparagraph (C) 

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

9 application was submitted to the corporation. 

10 ‘‘(iv) REASONS FOR DISAPPROVAL.—If an appli11 cation is disapproved, the corporation shall provide 

12 to the applicant the reasons for the disapproval not 

13 later than 30 days after a determination is made 

14 under this subparagraph. 

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

16 elects to use a credit score under this paragraph, the Di17 rector of the Federal Housing Finance Agency shall re18 quire the corporation to routinely update the validation 

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

20 the Director, in the Director’s discretion, deems to be nec21 essary to ensure such process remains appropriate and 

22 adequate and complies with any standards and criteria es23 tablished pursuant to section 1328 of the Federal Housing 

24 Enterprises Financial Safety and Soundness Act of 1992. 


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

2 the term ‘credit score’ means a numerical value or a cat3 egorization derived from a statistical tool or modeling sys4 tem used by a person who makes or arranges a loan to 

5 predict the likelihood of certain credit behaviors, including 

6 default.’’. 

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

8 PURCHASING RESIDENTIAL MORTGAGES.—Section 305 of 

9 the Federal Home Loan Mortgage Corporation Act (12 

10 U.S.C. 1454) is amended by adding at the end the fol11 lowing new subsection: 

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

13 may condition its purchase of a residential mortgage 

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

15 the borrower only if— 

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

17 scoring model that has been validated and approved 

18 by the Corporation under this subsection; 

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

20 publicly available a description of the process the 

21 corporation will use to validate and approve credit 

22 scoring models, which shall comply with any stand23 ards and criteria established by the Director of the 

24 Federal Housing Finance Agency pursuant to secVerDate Sep 11 2014 20:59 Feb 21, 2017 Jkt 069200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\H898.IH H898

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1 tion 1328 of the Federal Housing Enterprises Fi2 nancial Safety and Soundness Act of 1992; and 

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

4 credit score by all of its automated underwriting sys5 tems and any other procedures and systems used to 

6 purchase residential mortgages. 

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

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

9 evaluation of— 

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

11 a credit scoring model, including measures of the in12 tegrity, reliability, and accuracy of such model and 

13 an assurance that such model is consistent with the 

14 safe and sound operation of the Corporation; and 

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

16 the credit scoring model. 

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

18 a credit score under this subsection, the Corporation shall 

19 solicit applications from developers of credit scoring mod20 els for the validation and approval of such models under 

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

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

23 ‘‘(A) IN GENERAL.—The Corporation shall es24 tablish a date before which the Corporation shall 

25 make a determination with respect to any applicaVerDate Sep 11 2014 20:59 Feb 21, 2017 Jkt 069200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\H898.IH H898

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1 tion submitted under paragraph (3) and provide no2 tice of such determination to the applicant. Such 

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

4 on which an application is submitted to the Corpora5 tion. 

6 ‘‘(B) EXTENSIONS.—The Director of the Fed7 eral Housing Finance Agency may authorize up to 

8 2 extensions of the date established under subpara9 graph (A), each of which shall not exceed 30 days, 

10 upon the written request and a showing of good 

11 cause by the Corporation. 

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

13 provide notice to an applicant regarding the status 

14 of an application submitted under paragraph (3) not 

15 later than 60 days after the date on which the appli16 cation was submitted to the corporation. 

17 ‘‘(D) REASONS FOR DISAPPROVAL.—If an ap18 plication is disapproved, the corporation shall pro19 vide to the applicant the reasons for the disapproval 

20 not later than 30 days after a determination is made 

21 under this paragraph. 

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

23 elects to use a credit score under this subsection, the Di24 rector of the Federal Housing Finance Agency shall re25 quire the Corporation to routinely update the validation 


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

2 Director, in the Director’s discretion, deems to be nec3 essary to ensure such process remains appropriate and 

4 adequate and complies with any standards and criteria es5 tablished pursuant to section 1328 of the Federal Housing 

6 Enterprises Financial Safety and Soundness Act of 1992. 

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

8 the term ‘credit score’ means a numerical value or a cat9 egorization derived from a statistical tool or modeling sys10 tem used by a person who makes or arranges a loan to 

11 predict the likelihood of certain credit behaviors, including 

12 default.’’. 

13 SEC. 3. AUTHORITY OF DIRECTOR OF THE FEDERAL HOUS14 ING FINANCE AGENCY. 

15 Subpart A of part 2 of subtitle A of the Federal 

16 Housing Enterprises Financial Safety and Soundness Act 

17 of 1992 (12 U.S.C. 4541 et seq.) is amended by adding 

18 at the end the following new section: 

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

20 ‘‘The Director may, by regulation, establish stand21 ards and criteria for any process used by an enterprise 

22 to validate and approve credit scoring models pursuant to 

23 section 302(b)(7) of the Federal National Mortgage Asso24 ciation Charter Act and section 305(d) of the Federal 

25 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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