Bob Broeksmit says tri-merge ‘won’t be around for long’

Federal Housing Finance Agency (FHFA) Director Bill Pulte recently said on social media that a bi-merge option — requiring reports from two bureaus instead of three — is under consideration, echoing a move that was announced during the Biden administration. He also said the FHFA is studying a single-pull option.

Pulte canceled his in-person appearance Monday morning at MBA Annual, where many in the industry expected him to announce the bi-merge option. He is now scheduled to speak virtually on Tuesday.

The FHFA recently announced that all lenders can submit loans with Classic FICO or VantageScore 4.0 credit scores.

‘Won’t be around for long’

According to Broeksmit, the FHFA has “known for years that tri-merge is outdated and unnecessary, and they also understand the need to lower costs, fast.”

“The specific reform is still being worked out, but at this point, I am increasingly confident that tri-merge won’t be around for long. And the sooner it goes away, the better,” he said.

Tri-merge reports have long been the standard for loans sold to Fannie Mae and Freddie Mac, giving lenders a three-bureau view of a borrower’s credit but adding meaningful cost to each file. A move to a bi-merge or single-pull model could reduce borrower fees and lender expenses, but it raises questions about data consistency, risk modeling and technology changes to underwriting systems.

The potential change is drawing pushback from the credit reporting industry. Dan Smith, president and CEO of the Consumer Data Industry Association (CDIA), said in a statement that “more data, not less, produces better outcomes, and keeps borrowing costs down.”

“Lenders and borrowers benefit from the most complete, accurate picture, which is why maintaining the tri-merge credit report is critical to the safety and soundness of the mortgage industry,” Smith said.

Other initiatives

Broeksmit also addressed appraisal and capital rules, underscoring a full regulatory agenda as originators and servicers navigate a slower market.

MBA supports adoption of the new Uniform Appraisal Dataset 3.6, a requirement that had been scheduled to take effect Nov. 2, Broeksmit said. He thanked regulators for working with the industry on a path that gives more time to prepare.

“But as the November deadline approached, it became clear that too many appraisers, appraisal management companies, software vendors — and yes, some lenders — were not ready, and it would be your customers who would pay the price,” he said.

On the servicing side, MBA expects a new Basel III proposal by the end of 2026, MBA chairman Owen Lee, CEO of Success Mortgage Partners, said at the convention.

“When the rule was re-proposed earlier this year, the worst provisions for mortgages were removed, and MBA has been leading the charge to further rightsize capital requirements for mortgages, MSRs and warehouse. Stay tuned – a final rule is expected by year-end,” Lee said.

Lee also announced an “affordability action plan,” a list of 20 “specific and achievable reforms that our nation’s leaders should adopt.”

“None of these ideas require new laws. They could happen immediately, with the stroke of a pen,” he said.

MBA is also trying to bring more individual producers into the trade group’s orbit. The association is rolling out a new engagement effort aimed at loan officers, regardless of whether their employer is an MBA member.

“Practically, we’re going to offer LOs continuing education with best-in-class CE providers. We’ll provide coaching and training to help with their career development, and provide them with news and information that will help them in customer acquisition and retention,” Lee said.