II 

115TH CONGRESS 

1ST SESSION S. 1685 

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 SENATE OF THE UNITED STATES 

AUGUST 1, 2017 

Mr. SCOTT (for himself and Mr. WARNER) introduced the following bill; which 

was read twice and referred to the Committee on Banking, Housing, and 

Urban Affairs 

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.—Section 


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1 302(b) of the Federal National Mortgage Association 

2 Charter Act (12 U.S.C. 1717(b)) is amended by adding 

3 at the end the following: 

4 ‘‘(7)(A) DEFINITION.—In this paragraph, the term 

5 ‘credit score’ means a numerical value or a categorization 

6 derived from a statistical tool or modeling system used by 

7 a person who makes or arranges a loan to predict the like8 lihood of certain credit behaviors, including default. 

9 ‘‘(B) USE OF CREDIT SCORES.—The corporation 

10 may condition purchase of a residential mortgage by the 

11 corporation under this subsection on the provision of a 

12 credit score for the borrower only if— 

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

14 scoring model that has been validated and approved 

15 by the corporation under this paragraph; 

16 ‘‘(ii) 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, which process shall comply with any 

20 standards and criteria established by the Director of 

21 the Federal Housing Finance Agency pursuant to 

22 section 1328 of the Federal Housing Enterprises Fi23 nancial Safety and Soundness Act of 1992; and 

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

25 credit score by all of the automated underwriting 


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1 systems of the corporation and any other procedures 

2 and systems used by the corporation to purchase 

3 residential mortgages. 

4 ‘‘(C) VALIDATION AND APPROVAL PROCESS.—The 

5 process described in subparagraph (B)(ii) shall include an 

6 evaluation of— 

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

8 credit scoring model, including measures of the in9 tegrity, reliability, and accuracy of that model, and 

10 an assurance that the model is consistent with the 

11 safe and sound operation of the corporation; and 

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

13 credit scoring model. 

14 ‘‘(D) APPLICATION.—If the corporation elects to use 

15 a credit score under this paragraph, the corporation shall 

16 solicit applications from developers of credit scoring mod17 els for the validation and approval of those models under 

18 the process described in subparagraph (B)(ii). 

19 ‘‘(E) TIMEFRAME FOR DETERMINATION; NOTICE.— 

20 ‘‘(i) IN GENERAL.—The corporation shall make 

21 a determination with respect to any application sub22 mitted under subparagraph (D), and provide notice 

23 of that determination to the applicant, before a date 

24 established by the corporation that is not later than 


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1 180 days after the date on which an application is 

2 submitted to the corporation. 

3 ‘‘(ii) EXTENSIONS.—The Director of the Fed4 eral Housing Finance Agency may authorize up to 

5 2 extensions of the date established under clause (i), 

6 each of which shall not exceed 30 days, upon a writ7 ten request and a showing of good cause by the cor8 poration. 

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

10 provide notice to an applicant regarding the status 

11 of an application submitted under subparagraph (D) 

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

13 application was submitted to the corporation. 

14 ‘‘(iv) REASONS FOR DISAPPROVAL.—If an appli15 cation submitted under subparagraph (D) is dis16 approved, the corporation shall provide to the appli17 cant the reasons for the disapproval not later than 

18 30 days after a determination is made under this 

19 subparagraph. 

20 ‘‘(F) AUTHORITY OF DIRECTOR.—If the corporation 

21 elects to use a credit score under this paragraph, 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 subparagraph (B)(ii) as 

25 the Director determines necessary to ensure that the procVerDate Sep 11 2014 22:14 Aug 15, 2017 Jkt 069200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\S1685.IS S1685

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1 ess remains appropriate, adequate, and complies with any 

2 standards and criteria established pursuant to section 

3 1328 of the Federal Housing Enterprises Financial Safety 

4 and Soundness Act of 1992.’’. 

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

6 PURCHASING RESIDENTIAL MORTGAGES.—Section 305 of 

7 the Federal Home Loan Mortgage Corporation Act (12 

8 U.S.C. 1454) is amended by adding at the end the fol9 lowing: 

10 ‘‘(d)(1) DEFINITION.—In this subsection, the term 

11 ‘credit score’ means a numerical value or a categorization 

12 derived from a statistical tool or modeling system used by 

13 a person who makes or arranges a loan to predict the like14 lihood of certain credit behaviors, including default. 

15 ‘‘(2) USE OF CREDIT SCORES.—The Corporation 

16 may condition purchase of a residential mortgage by the 

17 Corporation under this section on the provision of a credit 

18 score for the borrower only if— 

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

20 scoring model that has been validated and approved 

21 by the Corporation under this subsection; 

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

23 publicly available a description of the process the 

24 Corporation will use to validate and approve credit 

25 scoring models, which shall comply with any standVerDate Sep 11 2014 22:14 Aug 15, 2017 Jkt 069200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\S1685.IS S1685

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1 ards and criteria established by the Director of the 

2 Federal Housing Finance Agency pursuant to sec3 tion 1328 of the Federal Housing Enterprises Fi4 nancial Safety and Soundness Act of 1992; and 

5 ‘‘(C) the Corporation provides for use of the 

6 credit score by all of the automated underwriting 

7 systems of the Corporation and any other procedures 

8 and systems used by the Corporation to purchase 

9 residential mortgages. 

10 ‘‘(3) VALIDATION AND APPROVAL PROCESS.—The 

11 process described in paragraph (2)(B) shall include an 

12 evaluation of— 

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

14 a credit scoring model, including measures of the in15 tegrity, reliability, and accuracy of that model and 

16 an assurance that the model is consistent with the 

17 safe and sound operation of the Corporation; and 

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

19 the credit scoring model. 

20 ‘‘(4) APPLICATION.—If the Corporation elects to use 

21 a credit score under this subsection, the Corporation shall 

22 solicit applications from developers of credit scoring mod23 els for the validation and approval of those models under 

24 the process described in paragraph (2)(B). 

25 ‘‘(5) TIMEFRAME FOR DETERMINATION; NOTICE.— 


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1 ‘‘(A) IN GENERAL.—The Corporation shall 

2 make a determination with respect to any applica3 tion submitted under paragraph (4), and provide no4 tice of that determination to the applicant, before a 

5 date established by the Corporation that is not later 

6 than 180 days after the date on which an applica7 tion is submitted to the Corporation. 

8 ‘‘(B) EXTENSIONS.—The Director of the Fed9 eral Housing Finance Agency may authorize up to 

10 2 extensions of the date established under subpara11 graph (A), each of which shall not exceed 30 days, 

12 upon the written request and a showing of good 

13 cause by the Corporation. 

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

15 provide notice to an applicant regarding the status 

16 of an application submitted under paragraph (4) not 

17 later than 60 days after the date on which the appli18 cation was submitted to the Corporation. 

19 ‘‘(D) REASONS FOR DISAPPROVAL.—If an ap20 plication submitted under paragraph (4) is dis21 approved, the Corporation shall provide to the appli22 cant the reasons for the disapproval not later than 

23 30 days after a determination is made under this 

24 paragraph. 


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1 ‘‘(6) AUTHORITY OF DIRECTOR.—If the Corporation 

2 elects to use a credit score under this subsection, the Di3 rector of the Federal Housing Finance Agency shall re4 quire the Corporation to routinely update the validation 

5 and approval process described in paragraph (2)(B) as the 

6 Director determines necessary to ensure that the process 

7 remains appropriate, adequate, and complies with any 

8 standards and criteria established pursuant to section 

9 1328 of the Federal Housing Enterprises Financial Safety 

10 and Soundness Act of 1992.’’. 

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

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

14 Housing Enterprises Financial Safety and Soundness Act 

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

16 at the end the following: 

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

18 ‘‘The Director may, by regulation, establish stand19 ards and criteria for any process used by an enterprise 

20 to validate and approve credit scoring models pursuant to 

21 section 302(b)(7) of the Federal National Mortgage Asso22 ciation Charter Act and section 305(d) of the Federal 

23 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 on the date that is 180 days after the date of enactment 

4 of this Act. 

Æ 


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