Bill Pulte, the head of an oversight agency for mortgage giants Fannie Mae and Freddie Mac, is planning "a full scale review" of the credit bureaus.
The director of the entity formerly known as the Federal Housing Finance Agency posted
"We are looking into changing the name of 'LLPA' to just 'pricing," said Pulte, who now calls FHFA U.S. Federal Housing, in
Pulte also reaffirmed
Score provider FICO
How multiple entities and reports impact mortgage credit costs
Efficiency has been a central concern in the mortgage industry's push to implement advanced credit scores and reporting, which could improve the use of alternative indicators to assess borrowers' ability to repay and expand access to safe financing.
There has been debate over whether the mortgage industry's traditional use of a tri-merge credit report, combining data from Equifax, Experian, and TransUnion, is truly necessary.
A Standard & Poor's study found there wasn't a significant difference in using two credit reports rather than three in line with an FHFA proposed in a Biden era, but separate Transunion research indicated
Mortgage Bankers Association President and CEO Bob Broeksmit said in a blog post that
One counterargument to using only one score is that mortgages are far larger than other consumer loans and require more careful vetting.
"The tri-merge credit report reflects the most accurate picture of a consumer's creditworthiness and is an essential driver of safety and soundness in the mortgage ecosystem," Transunion said in a previous statement.
How credit and closing costs in home lending compare
FICO scores have been rising in recent years, markedly increasing from 60 cents to $2.75 in 2023, according to
Anecdotal evidence suggests hard-pull tri-merged reports used in origination (as opposed to a soft pull for qualification purposes) have cost from $50 to $110, according to
"Our profit margin for this product has remained materially unchanged for decades. The only substantial increase in our profit margin occurred in 2016," Transunion said in a response to
FICO does have some influence over the credit reporting agencies' pricing, according to the Community Home Lenders of America.
"While FICO does not set specific prices to the end-use (lender and their customers), their market power allows them to unilaterally raise boundaried wholesale prices to the national CRAs," the trade group noted in
It's also important to note that credit reporting, scoring, and reselling costs are not the biggest drivers of ancillary mortgage expenses, according to the Consumer Data Industry Association and the CFPB.
"The largest disclosed closing costs are origination fees paid to the lender (including discount points). Title fees (including title insurance, title search, and settlement fees) are the next largest category of closing costs (and loan costs)," the CFPB noted in its request for feedback last year.