Fair Isaac drops after FHFA finalizes rule on alternatives for Fannie, Freddie

The Federal Housing Finance Agency sent to the Federal Register for publication a final rule on the validation and approval of third-party credit score models that can be used by Fannie Mae (FNMA) and Freddie Mac (FMCC). The regulation requires a four-phase process for validation and approval of credit score models: Solicitation of applications from credit score model developers; Submission and initial review of submitted applications; Credit score assessment; and, Enterprise business assessment. "One of my priorities is to ensure that the American people have a safe and sound path to sustainable homeownership, which requires tools to accurately measure risk," said FHFA Director Mark Calabria. "The final rule we are publishing today is an important step toward achieving that goal," said Calabria. Under the new rule, Fannie and Freddie will have to consider credit-score alternatives to Fair Isaac's (FICO) FICO score when determining a mortgage applicant's creditworthiness, Andrew Ackerman of the Wall Street Journal points out. Shares of Fair Isaac are down 2%, or $5.90, to $352.00 following the news.

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