Mba Ceo Bob Broeksmit Calls For Credit Score Modernization

On Tuesday, the Mortgage Bankers Association (MBA)’s Residential Board of Governors passed a resolution calling for the end of the tri-merge credit report requirement to originate GSE loans.

In a video released Wednesday, MBA President and CEO Bob Broeksmit addressed credit score modernization and MBA’s advocacy efforts to introduce competition and reduce redundancies in obtaining and reporting borrower credit scores and reports.

“Eighteen months ago, we stepped up our efforts and asked regulators, FHFA, CFPB and the FTC to look into how their policies may be contributing to the costs of credit reports and scores spiking,” Broeksmit said in Wednesday’s video. “While I suspect you all know that things never move as quickly in [Washington] D.C. as we would like, I can report that we are making meaningful progress. A primary reason is that we have found an eager ally and FHFA Director, Bill Pulte, who is sharply focused on lowering borrowers’ costs.”

Broeksmit added that just a few weeks ago, Pulte directed the GSEs to begin accepting VantageScore 4.0 as an alternative to FICO. “That is the kind of competition we need in the credit scoring space that will lead to innovation in the form of more predictive scoring and lower costs, both for you and your customers,” Broeksmit said.

In the aftermath of Pulte’s directive, both FICO and VantageScore released analyses from their respective data scientists, each asserting that their own scoring model more accurately represents borrowers’ financial profiles and better predicts defaults, while questioning the methodology of the other.

Tri-merge is ‘an outdated relic’

Addressing the tri-merge, Broeksmit said it “is an outdated relic of a time when data was fragmented and inconsistent,” which led to disparities between the reports that the different credit reporting agencies produced.

Broeksmit confirmed in a June blog post that the trade group has “begun studying the feasibility” of moving to a single credit report for mortgage underwriting, adding that MBA is “engaging with the Trump administration, and specifically FHFA, to conduct the assessments needed to reform this process and align with the rest of the consumer finance market.”

Broeksmit assured viewers that MBA is collecting the data and “meeting with all the important stakeholders” to find a way forward that will increase competition and credit reporting without unduly increasing risk or disrupting the mortgage market.