Republicans look to codify tri-merge credit model into law

FHFA has sought to transition to a ‘bi-merge’ model that would require only two credit profiles to be pulled instead of three

Rep. Scott Fitzgerald (R-Wis.) has introduced a bill to the U.S. House of Representatives that would codify the “tri-merge” credit model into law, a rebuke to the Federal Housing Finance Agency (FHFA)’s recent efforts to transition to a “bi-merge” model that would require only two credit reports to be pulled instead of three.

This is according to an official log of the proposed bill, designated as House Resolution (HR) 7857 and which Fitzgerald is calling the “Accurate Credit Reporting for Homebuyers Act.”

The bill is designed to “require the director of the [FHFA] to issue a rule to condition the purchase of a residential mortgage loan on the delivery of credit reports and credit scores from each consumer reporting agency that compiles and maintains files on consumers on a nationwide basis,” the official description reads.

Since there are currently three credit reporting agencies that offer such information, this would effectively codify the current process if passed into law.

“President Biden’s financial regulators seem to rely more on ideology than facts and data, and the FHFA’s proposal to shift from tri-merge to bi-merge credit reporting requirement is just the latest example,” said Rep. Fitzgerald in a statement. “The FHFA’s proposal could be the obstacle that keeps borrowers from obtaining a mortgage if they have lower FICO scores but are otherwise credit-worthy.”

Shortly after being introduced to the House, it was referred to the House Financial Services Committee for further deliberation, according to the official congressional log.

TransUnion, one of the major credit reporting agencies, has come out in support of the measure according to a statement shared with HousingWire.

“This legislation reflects growing recognition that the current tri-merge credit reporting system provides consumers with the most access to mortgages, while preserving the safety and soundness of the mortgage ecosystem,” said Allison Shuster, head of U.S. government relations at TransUnion.

The current version of the bill is only supported by one side of the aisle, with Republican Reps. Daniel Meuser (Penn.) and Alexander Mooney (W.V.) listed as co-sponsors. At a hearing last year discussing the proposal, lawmakers from both parties questioned FHFA Director Sandra Thompson on the viability of such a model in meeting consumers’ needs.

“We believe after analysis that moving from three credit scores to two is going to be beneficial for the borrowers, and it will encourage competition from the credit reporting agencies,” Thompson said during the hearing. “And it would lower costs for the borrowers because instead of three credit reports, they only pull two, and then the lender picks which two those are. Right now, we’re working through the process with the GSEs on trying to figure out whether or not there is going to be the median or the average.”

Late last year, FHFA announced that the move to a bi-merge system from a tri-merge system had been pushed back, and subsequently announced last month that the transition is now scheduled to occur in late 2025.

A bill codifying the tri-merge system would conceivably halt that process, but Congress is very narrowly divided. The House Republican majority currently only has a one seat advantage over Democrats in the chamber should they remain united on voting for a particular bill.

This could complicate the path to passage in the House, to say nothing of overcoming a Democratic majority in the Senate and a Democratic president in the months before hotly-contested elections for both Congress and the White House this fall.

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