[David] Alice, love to get your take on the tri merge and start with you on that commentary. 30 to 40% increase. Thank God, MBS.
[Alice] So just for a little context for our listeners, we’ve watched the cost of credit reports go up year after year. And we do have a lot of services that go with that. So that’s usually when you look at Experian, TransUnion, and Equifax, their position and what they’ll talk about as well, they pay a FICO licensing fee, and then there’s the actual bureau or agent that the mortgage company might use who also has a markup. So there’s multiple services in these fees. There’s ways that lenders may bundle or not bundle. So it’s not like there’s one flat cost for a credit report. We gotta make that clear, right? There’s a fee that the main, I’ll call them the main. Bureaus, repositories of the data TransUnion, Experian, and Equifax, they have their fees. But then the piece that I think MBA is going after is that it’s mandatory to have something from each one of these agencies in a credit file when we get a mortgage loan. And so when they make the term, the government control, I think that’s where that’s coming from, is if we didn’t have that, if we didn’t have Fannie, Freddie required to requiring us as lenders to have all three repository data within the charge, then that should significantly open up competition and be able to make this better. Also, putting the Vantage score out there, the Vantage 4.0 out there, making that more usable for partners to access. So it’s, I think it’s so there’s a lot of layers that go with this, with where is the fee increase coming from? So that will vary by, by lender as to what their actual impact is. But it is very real. It is getting very expensive. It’s hundreds of dollars. Do any of you guys remember when a credit report was like $9? It was super cheap. I know I very to have that fee. So it’s become very expensive for lenders. Some of them bury it in something else, but we have a federal law that says if your credit report is X, then that number X needs to show on the loan estimate and the closing disclosure. So the customer should be getting that exact fee. And again, lenders have ways to manage that. So I think the MBA, we need their help. We do need to try and get Fannie and Freddy to get off of this tri merged requirement, but I will tell you, be careful what you wish for because we got trigger leads done away with and prices are now up. I’m not saying that’s a direct correlation, but if you have an agency who has loses a big source of revenue and now they have to try and make up that revenue. I don’t work in their inner workings. I don’t have insider knowledge. I can’t say directly that’s what it is. But to me this is lining up similarly with that. So if we say, great, we just wanna have two credit reports now we don’t wanna have three. Okay, that’s another income cut to them. Does that necessarily equate to a price reduction? I don’t know. We’ll have to wait and see ’cause there’s so many factors driving up. Credit report costs you.
[David] you really bring the layered effect that you bring up is really great point. Really,
[KIttle] David here we have the 50 year mortgage put out there four weeks ago, five, whatever it is now. And if you really, which you know, we all agree, I think on this call is a lose. Nobody should really go after that. If you really wanna have an impact on the mortgage. A few dollars here and there. Pulte could, I guess because you were talking about Fannie and Freddie, just make the decision from FHFA that we’re not gonna have to have the trimers. Do that today and impact closing cost if that’s what they want to do.
[Alice] There’s a huge technology unwind for that though. Yeah. That would take some time just so people are aware, that’s not something that happens overnight. And I get concerned with the fair lending aspects for consumers. Is it really a benefit to a consumer to not know, here are all three, let’s take the best one. And if you’re saying as an industry, we’re gonna drop down to just using two, and we talked about this on a previous show, and I think Marc Helm was on the same page with me, that, there are a lot of customers who are on that bubble where one bureau over the other could make a difference of whether they get the loan or not.
[David] Yep. Great point. Lot of discussion going on. Thank you MBA for what you’re trying to do to mitigate the cost increases. But you raised a really good point, Alice, that it’s a multilayer.
[Kittle] Throw this out there too. What about Vantage score? I then they’re not in the Trier Alice? So you still have Vantage score, right?
[Alice] It would be a separate thing that you order. Yeah. And that’s the other thing they’re saying, right? The bureaus are saying we have more costs because we have to verify rent. We’ve got all these other, nontraditional types of credit that we’re having to now add. Bill, it looks like you’re trying to add in.
[Bill] I think you mentioned a little bit you first start with the fundamental problem of you’ve got from the FICO score perspective, you’ve got a single entity that has an absolute required mandate. So they can charge whatever they want, and. Number one. Number two, they’re a publicly traded company. And I was just trying to find it and I couldn’t quickly, but if you look at a chart of Fair Isaac’s stock price versus, the indices, it’s straight up. So it’s hard to argue that they have not monopolized their monopoly and which again, is a publicly traded company. That’s what they’re supposed to do for their shareholders. That’s all the stuff to try and figure out how to undo. And then now it seems so then you get the next layer of Equifax, TransUnion, Experian, right? They’re arguing that FICO’s the problem, FICO’s arguing that they’re becoming the problem. And you have, so now you have four entities all publicly traded, all with a government mandated monopoly and then David, to your point, even with VantageScore VantageScore is owned by TransUnion. Equifax, exactly. Experience. You just, how do you undo it in a way that, that brings real competition without, and I think this is the part where, you know the edict byte, gets into problems acknowledging that the investor side is really the tail wagging the dog. They’re like, basically they’re like, you guys can use whatever you want, but if we don’t have confidence in its predictive ability then we’re gonna back off on pricing, which means rates go up. So it’s a match.
[Alice]Yeah. You have to retain the investor confidence in the quality of the score. The borrower’s ability to repay. Yeah.
[David] There’s, I’m gonna throw this one into this discussion that, we talked about the Fannie and Freddie being spun off and now that discussion is that maybe not so quickly, probably not gonna happen, or who knows when that’s gonna happen. Does that enter into this, the fact that it’s still a part, gonna be a part of the federal government for a period of time, is that gonna help this problem or exacerbate the problem? Any thoughts?
[Bill] I just, I think the more people you have around the table, the more it hurts. Yeah.
[David] I agree with you.
[Alice] Yeah. And this is such a smaller, ultimately smaller piece of the total pie of things that’ll be impacted. It is one, yeah.
[David]I’m, the good news is we’ll have a new insight into this. My good friend Christie Moss wrote me that she starts her new job effective today at FICO, and she’s got a, she said it is a job that’s just been perfectly designed for her. Christie Moss, I know you listen to the podcast. Congratulations on a new job and Fico, hopefully we’re gonna get some new insights from you. David, you know her really well as I do just a dear friend person,
[Kittle] Congratulations.
[David ]Yeah, congratulations, Christie Moss. There we go. Made that announcement that will pick, hopefully hope you didn’t mind us doing that, Christie. I know it’s official today and we can talk about,
[Kittle] that’s the isn’t that the f word of mortgage? I thought four letter word. The four letter F word. Yep.
[David] Very good. Good stuff. Alice, what else do you have for us? Anything? You already talked earlier about the new loan limits.
[Alice] Yeah, just a quick the annual notice of our official increase in loan limits. Yeah. As num lenders, obviously were dabbling in it ahead of the formal announcement. So the new loan limit for 2026 is 8.32, 7.50 for a single family. FHA hasn’t formally come out with their announcement. They are automatically based on what FIFA announces, so a lot of folks will just back into it from there to get that FHAs floor. Meaning every county across the country will get at least 541,287. They’re automatically at the new FIFA loan 65% of the FIFA loan limit. So all the other counties though, for your FHA lenders out there, those can move up and down based on the median house price. So we are, it is important to still look at what FHA will publish and keeping in mind you cannot close that loan. They are looking for that. Note date is January 1st. Let me just recheck that now that I said that out loud. No, I yeah, is ensuring, I’m sorry, go ahead, Bill.
[Bill] So I was gonna ask that because Fannie, Freddie is based on delivery, which means. I thought FHA was even on case number assignment date.
[Alice] I’m sorry. You’re you are absolutely right. Yes. . I just to say that was coming outta my mouth. I went, wait a minute, that’s not right. No. FHA and VA of course VFHA is definitely on case number assignment date. And so you may be, have taken the application ahead of time, but then not ordering that case number, that’s up to you If you wanna make that wait, I can’t advise you on that, whether that’s smart for you ’cause you’ve got appraisals to order and loans to move. That’s just a heads up on that for the FHA loan limits and check, we have seen some counties go down. So you wanna be careful that if you’re economy, it’s not always up. That is above. That baseline, if you’re in a high cost area, occasionally you can have one or two counties actually drop in their median pricing. Now we may not, house prices have been progressively going upwards, so hopefully everyone’s at least the same or a little bit better. So watch for that with your loan amount. Changes on f ha’s announcement should be any day now.
[David] Good deal. Thank you Alice. Very much appreciate it.
Alice Alvey, Master CMB
She handles development of their World Class Training program designed to support UHM partners and organizational effectiveness.
Prior to UHM, Alice served as Senior Vice President at Indecomm leading the Indecomm-Mortgage U division, Internal QA and Compliance and SaaS technologies. Indecomm acquired Mortgage U in 2013, where Alice was President/Co-founder, providing training and consulting since 1996. Prior to MU she served as SVP of Operations at a national bank overseeing operations for wholesale, retail and correspondent from underwriting through servicing, and compliance.
She has been in the trenches of mortgage lending operations from application through servicing for over 30 years. Her authoring work in training content, policies and procedures and the FHA/VA Practical guides illustrates her ability to bridge regulatory requirements with day-to-day operations.
Alice has been a weekly contributor to the Lykken on Lending show since its beginning in April 2009 and has made her weekly contributions to 450+ episodes!