Multiple versions of a credit model may lead to added cost and complexity
While FHFA states that new scores provide “only marginal benefits,” they go on to say that there are “compelling reasons” to change. It is not clear how that conclusion is reached.
They ask market participants for cost estimates, and state that the GSEs will require 12-18 months to implement changes, but do not provide cost estimates for the Enterprises.
They acknowledge that there are risks associated with the proposed changes but do not provide a structure for ameliorating these concerns, or a cost estimate of implementing it.
They ignore the potential risks associated with the credit loosening implicit in the new VantageScore model that stem from more relaxed trade line histories and increases to systemic risks associated with its adoption by lightly-regulated nonbanks.
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