[Congressional Record Volume 164, Number 40 (Wednesday, March 7, 2018)]
[Senate]
[Pages S1474-S1475]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
SA 2100. Mr. SCOTT (for himself, Mr. Kaine, Mr. Jones, Ms. Duckworth,
Mrs. McCaskill, and Mr. Warner) submitted an amendment intended to be
proposed by him to the bill S. 2155, to promote economic growth,
provide tailored regulatory relief, and enhance consumer protections,
and for other purposes; which was ordered to lie on the table; as
follows:
At the appropriate place, insert the following:
SEC. ___. CREDIT SCORE COMPETITION.
(a) Credit Score Validation; Validation Process.--
(1) Use of credit scores by fannie mae in purchasing
residential mortgages.--Section 302(b) of the Federal
National Mortgage Association Charter Act (12 U.S.C. 1717(b))
is amended by adding at the end the following:
``(7)(A) Definition.--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.--The corporation may condition
purchase of a residential mortgage by the corporation under
this subsection 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 the credit
score by all of the automated underwriting systems of the
corporation and any other procedures and systems used by the
corporation to purchase residential mortgages.
``(C) Validation and Approval Process.--The process
described in subparagraph (B)(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 that model, and an assurance
that the 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.
``(D) 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 those models under the
process described in subparagraph (B)(ii).
``(E) Timeframe for Determination; Notice.--
``(i) In general.--The corporation shall make a
determination with respect to any application submitted under
subparagraph (D), and provide notice of that determination to
the applicant, before a date established by the corporation
that is not 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 a 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 (D) not later than 60 days after
the date on which the application was submitted to the
corporation.
``(iv) Reasons for disapproval.--If an application
submitted under subparagraph (D) 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.
``(F) 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 (B)(ii) as the Director determines
necessary to ensure that the process remains appropriate,
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.''.
(2) 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:
``(d)(1) Definition.--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.
[[Page S1475]]
``(2) Use of Credit Scores.--The Corporation may condition
purchase of a residential mortgage by the Corporation 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 the credit score
by all of the automated underwriting systems of the
Corporation and any other procedures and systems used by the
Corporation to purchase residential mortgages.
``(3) Validation and Approval Process.--The process
described in paragraph (2)(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 that model and an assurance that
the 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.
``(4) 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 those models under the
process described in paragraph (2)(B).
``(5) Timeframe for Determination; Notice.--
``(A) In general.--The Corporation shall make a
determination with respect to any application submitted under
paragraph (4), and provide notice of that determination to
the applicant, before a date established by the Corporation
that is not 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 (4) not later than 60 days after
the date on which the application was submitted to the
Corporation.
``(D) Reasons for disapproval.--If an application submitted
under paragraph (4) 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.
``(6) 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 (2)(B) as the Director determines
necessary to ensure that the process remains appropriate,
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.''.
(b) 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:
``SEC. 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.''.
(c) Effective Date.--The amendments made by this section
shall take effect on the date that is 180 days after the date
of enactment of this Act.
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