FHA keeps tri-merge credit reports amid new scoring models

FHA cited multiple reasons for adopting new credit score models, including stimulating long-delayed competition, reducing systemic dependence on a single legacy model, encouraging pricing discipline in credit reporting, and reflecting contemporary consumer credit behavior. Lenders are expected to receive implementation dates and additional guidance later in the year. Industry debate continues over whether to use single-file credit reports in limited cases to reduce costs without systemic risk. Trade groups differ on borrower cost impacts versus market stability. Community Home Lenders of America supported FHA’s approach, warning that a single credit pull would harm both FHA and borrowers and could increase mortgage risks if GSE practices diverged. Consumer Data Industry Association leadership agreed that tri-merge reports support data accuracy, competition, and investor confidence, and that requiring tri-merge across acceptable scoring models preserves consistency and integrity.

"FHA cited several reasons for adopting the new credit score models, including a desire to catalyze long-delayed competition, reduce systemic dependency on a single legacy model, encourage pricing discipline in the credit reporting market, and better reflect contemporary consumer credit behavior. Lenders should expect implementation dates and further guidance later this year."

"Some leaders, including the Mortgage Bankers Association (MBA), have advocated for single-file credit reports in specific and limited cases, arguing it would reduce costs without introducing systemic risk. The proposal has revived arguments over borrower costs versus market stability, dividing trade associations."

"The Community Home Lenders of America (CHLA) praised the FHA's decision, asserting in a statement that a single credit pull would have harmed both FHA and their borrowers. In a January statement, the CHLA warned that diverging from the government-sponsored enterprises (GSEs) if they adopted a single pull while the FHA did notcould increase mortgage risks and create incentives to game the system."

"Dan Smith, president and CEO of the Consumer Data Industry Association (CDIA), agreed that the FHA made the right call. He emphasized that the tri-merge report is essential for promoting data accuracy, market competition and investor confidence. More data, not less, is the foundation of a sound mortgage market, Smith noted in a statement."

Read at www.housingwire.com