← Back to Bills
H.R. 898House115th Congress (2017-2019)In Committee

Credit Score Competition Act of 2017

Sponsored by Edward R. RoyceRep. Edward R. Royce (R-CA)
Introduced February 7, 2017

AI-Generated Summary

Updated April 15, 2026 at 12:25 PM UTC

The Credit Score Competition Act of 2017 would require the government‑backed mortgage firms Fannie Mae and Freddie Mac to set up a formal process for approving any credit‑scoring model they use when deciding whether to buy a residential mortgage. The law makes the approval process public, ties it to standards set by the Federal Housing Finance Agency (FHFA), and establishes timelines for reviewing and notifying model developers. It aims to increase transparency and competition in the credit‑score market, affecting borrowers, mortgage lenders, and companies that create credit‑scoring models.

Key Provisions

  • Fannie Mae and Freddie Mac may only require a borrower’s credit score if the score comes from a model that the GSE has validated and approved.
  • Each GSE must publish a description of its validation and approval process, which must meet FHFA‑established standards.
  • The GSEs must solicit applications from credit‑scoring model developers and decide on each application within 180 days (with up to two 30‑day extensions).
  • Applicants must receive a status update within 60 days and, if denied, a written explanation within 30 days.
  • The FHFA director can set and update the validation standards and may require the GSEs to revise their processes as needed.
  • The term “credit score” is defined as a numerical value or categorization derived from a statistical model used to predict credit behavior.
  • The new rules become effective 180 days after the law is enacted.

Legislative Activity

Stay on top of the latest movement without scrolling through every action

1 earlier action
HouseIntro Referral Latest Action

Referred to the House Committee on Financial Services.

Financial Services Committee

February 7, 2017

View full timeline
HouseIntro Referral

Introduced in House

February 7, 2017

HouseIntro Referral

Referred to the House Committee on Financial Services.

Financial Services Committee

February 7, 2017

Bill Text

Latest available legislative text

Reading Mode
Latest
Raw Text PDF XML
Introduced in HouseIssued February 7, 2017

I

115th CONGRESS

1st Session

H. R. 898

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.

Short title

This Act may be cited as the Credit Score Competition Act of 2017.

2.

Credit score validation; validation process

(a)

Use of credit scores by Fannie Mae in purchasing residential mortgages

Subsection (b) of section 302 of the Federal National Mortgage Association Charter Act (12 U.S.C. 1717(b)) is amended by adding at the end the following new paragraph:

(7)
(A)

Use of credit scores

The corporation may condition its purchase of a residential mortgage under this section on the provision of a credit score for the borrower only if—

(i)

the credit score is derived from any credit scoring model that has been validated and approved by the corporation under this paragraph;

(ii)

the corporation has established and made publicly available a description of the process the corporation will use to validate and approve credit scoring models, which process shall comply with any standards and criteria established by the Director of the Federal Housing Finance Agency pursuant to section 1328 of the Federal Housing Enterprises Financial Safety and Soundness Act of 1992; and

(iii)

the corporation provides for the use of such credit score by all of its automated underwriting systems and any other procedures and systems used to purchase residential mortgages.

(B)

Validation and approval process

The process described in subparagraph (A)(ii) shall include an evaluation of—

(i)

the criteria used to validate and approve a credit scoring model, including measures of the integrity, reliability, and accuracy of such model, and an assurance that such model is consistent with the safe and sound operation of the corporation; and

(ii)

the data necessary for the validation of the credit scoring model.

(C)

Application

If the corporation elects to use a credit score under this paragraph, the corporation shall solicit applications from developers of credit scoring models for the validation and approval of such models under the process described in subparagraph (A)(ii).

(D)

Timeframe for determination; notice

(i)

In general

The corporation shall establish a date before which the corporation shall make a determination with respect to any application submitted under subparagraph (C) and provide notice of such determination to the applicant. Such date shall not be later than 180 days after the date on which an application is submitted to the corporation.

(ii)

Extensions

The Director of the Federal Housing Finance Agency may authorize up to 2 extensions of the date established under clause (i), each of which shall not exceed 30 days, upon the written request and a showing of good cause by the corporation.

(iii)

Status notice

The corporation shall provide notice to an applicant regarding the status of an application submitted under subparagraph (C) not later than 60 days after the date on which the application was submitted to the corporation.

(iv)

Reasons for disapproval

If an application is disapproved, the corporation shall provide to the applicant the reasons for the disapproval not later than 30 days after a determination is made under this subparagraph.

(E)

Authority of Director

If the corporation elects to use a credit score under this paragraph, the Director of the Federal Housing Finance Agency shall require the corporation to routinely update the validation and approval process described in subparagraph (A)(ii) as the Director, in the Director’s discretion, deems to be necessary to ensure such process remains appropriate and adequate and complies with any standards and criteria established pursuant to section 1328 of the Federal Housing Enterprises Financial Safety and Soundness Act of 1992.

(F)

Credit score defined

In this paragraph, the term credit score means a numerical value or a categorization derived from a statistical tool or modeling system used by a person who makes or arranges a loan to predict the likelihood of certain credit behaviors, including default.

.

(b)

Use of credit scores by Freddie Mac in purchasing residential mortgages

Section 305 of the Federal Home Loan Mortgage Corporation Act (12 U.S.C. 1454) is amended by adding at the end the following new subsection:

(d)
(1)

Use of credit scores

The Corporation may condition its purchase of a residential mortgage under this section on the provision of a credit score for the borrower only if—

(A)

the credit score is derived from any credit scoring model that has been validated and approved by the Corporation under this subsection;

(B)

the Corporation has established and made publicly available a description of the process the corporation will use to validate and approve credit scoring models, which shall comply with any standards and criteria established by the Director of the Federal Housing Finance Agency pursuant to section 1328 of the Federal Housing Enterprises Financial Safety and Soundness Act of 1992; and

(C)

the Corporation provides for use of such credit score by all of its automated underwriting systems and any other procedures and systems used to purchase residential mortgages.

(2)

Validation and approval process

The process described in paragraph (1)(B) shall include an evaluation of—

(A)

the criteria used to validate and approve a credit scoring model, including measures of the integrity, reliability, and accuracy of such model and an assurance that such model is consistent with the safe and sound operation of the Corporation; and

(B)

the data necessary for the validation of the credit scoring model.

(3)

Application

If the Corporation elects to use a credit score under this subsection, the Corporation shall solicit applications from developers of credit scoring models for the validation and approval of such models under the process described in paragraph (1)(B).

(4)

Timeframe for determination; notice

(A)

In general

The Corporation shall establish a date before which the Corporation shall make a determination with respect to any application submitted under paragraph (3) and provide notice of such determination to the applicant. Such date shall not be later than 180 days after the date on which an application is submitted to the Corporation.

(B)

Extensions

The Director of the Federal Housing Finance Agency may authorize up to 2 extensions of the date established under subparagraph (A), each of which shall not exceed 30 days, upon the written request and a showing of good cause by the Corporation.

(C)

Status notice

The Corporation shall provide notice to an applicant regarding the status of an application submitted under paragraph (3) not later than 60 days after the date on which the application was submitted to the corporation.

(D)

Reasons for disapproval

If an application is disapproved, the corporation shall provide to the applicant the reasons for the disapproval not later than 30 days after a determination is made under this paragraph.

(5)

Authority of Director

If the Corporation elects to use a credit score under this subsection, the Director of the Federal Housing Finance Agency shall require the Corporation to routinely update the validation and approval process described in paragraph (1)(B) as the Director, in the Director’s discretion, deems to be necessary to ensure such process remains appropriate and adequate and complies with any standards and criteria established pursuant to section 1328 of the Federal Housing Enterprises Financial Safety and Soundness Act of 1992.

(6)

Credit score defined

In this subsection, the term credit score means a numerical value or a categorization derived from a statistical tool or modeling system used by a person who makes or arranges a loan to predict the likelihood of certain credit behaviors, including default.

.

3.

Authority of Director of the Federal Housing Finance Agency

Subpart A of part 2 of subtitle A of the Federal Housing Enterprises Financial Safety and Soundness Act of 1992 (12 U.S.C. 4541 et seq.) is amended by adding at the end the following new section:

1328.

Regulations for use of credit scores

The Director may, by regulation, establish standards and criteria for any process used by an enterprise to validate and approve credit scoring models pursuant to section 302(b)(7) of the Federal National Mortgage Association Charter Act and section 305(d) of the Federal Home Loan Mortgage Corporation Act.

.

4.

Effective date

The amendments made by this Act shall take effect 180 days after the date of enactment of this Act.