FHFA Prepares Bi-Merge Credit Report Requirement for Fannie Mae and Freddie Mac Loans
Federal regulators are moving to adjust mortgage underwriting standards for loans purchased by Fannie Mae and Freddie Mac. The Federal Housing Finance Agency is preparing to direct the government-sponsored enterprises to accept bi-merge credit reports—which pull data from two major credit bureaus—instead of requiring traditional tri-merge reports that combine records from Equifax, Experian, and TransUnion. The shift is expected to be formally announced at an upcoming industry conference, with implementation following within one to three months.
This transition directly impacts mortgage lenders, home buyers, and real estate investors applying for conventional financing backed by Fannie Mae and Freddie Mac. Historically, lenders were required to purchase data from all three credit reporting agencies for every loan file, a process that industry groups like the Mortgage Bankers Association have argued adds unnecessary transaction costs for borrowers. By allowing lenders to select two bureaus rather than three, federal officials aim to foster competition among credit reporting agencies and reduce upfront closing costs associated with loan origination.
While media reports indicate the directive will be unveiled shortly, the exact timeline and operational mechanics remain subject to final regulatory issuance. Regulatory efforts to move away from mandatory tri-merge requirements were previously explored during prior agency leadership but faced delays due to technical implementation hurdles across loan origination systems. Furthermore, while agency officials frame the move as a cost-saving measure for consumers, it remains uncertain how credit reporting agencies will adjust their pricing structures in response or how individual lenders will choose which two bureaus to pull from when underwriting individual loan files.
The credit report policy shift follows other recent regulatory modifications aimed at expanding credit assessment options for conventional residential loans. The housing finance agency recently permitted the enterprises to utilize VantageScore 4.0 credit scores alongside traditional FICO scores, establishing a unified pricing grid that treats both scoring models equally for loan pricing purposes. For real estate investors and residential buyers, the practical implication is a potential reduction in administrative loan origination fees and slightly streamlined credit verification steps during the mortgage application process, though borrowers should continue monitoring all three of their credit files to ensure accuracy across all major credit bureaus before applying for a mortgage.
Source: HousingWire
