Rising fees prompt rethink of tri-merge credit rule
The Mortgage Bankers Association (MBA) is investigating whether the mortgage industry could move away from its current requirement for three credit reports per loan, a change that could reduce closing costs for homebuyers.
MBA president and CEO Bob Broeksmit announced Friday that early discussions with association members suggest “a single report for mortgages would be feasible without posing undue risk to the GSEs (government-sponsored enterprises).”
The initiative comes as Federal Housing Finance Agency director Bill Pulte has emphasized his focus on lowering consumer costs and improving efficiency in the mortgage market. Currently, lenders must obtain three separate credit reports to originate loans backed by GSEs or government programs.
Broeksmit described the tri-merge credit report system as “an anachronism from the days when there were significant disparities in coverage by the credit bureaus.” He argued that this approach creates an anticompetitive market that allows credit reporting companies to raise prices without facing normal competitive pressures.
The three national credit bureaus have reported significant earnings gains in their mortgage segments despite mortgage originations falling to levels not seen since the mid-1990s, according to MBA’s analysis.
MBA said that a single credit report model would align the mortgage industry with other consumer finance sectors, including home equity and auto loans, which have successfully operated with single-file, single-score approaches. Broeksmit noted that gaps in credit data coverage or quality that may have existed decades ago “appear to have closed” due to modernization of credit reporting systems.
The MBA emphasized that while tri-merge reports are required for GSE loans, the enterprises do not use credit scores for underwriting decisions, and there appears to be “limited additive value in the data contained in multiple reports.”
In a recent letter, MBA asked FHFA to share expertise on the issue and participate in discussions about reducing credit reporting costs. The association plans to continue its investigation and work with the Trump administration on potential reforms.
The proposal represents part of broader industry efforts to address what MBA calls “steep price increases” in credit reporting services that contribute to higher mortgage closing costs for consumers.
What are your thoughts on the potential of this report model to reshape the mortgage industry? Share your insights below.
