MBA’s Bob Broeksmit on Increasing Competition in Credit Scoring and Reporting
Mortgage Bankers Association President and CEO Bob Broeksmit, CMB, released a video on Aug. 6 discussing MBA’s work with FHFA and the GSEs on credit score modernization.
Broeksmit noted that for several years a top MBA advocacy priority has been to introduce competition and reduce redundancy in obtaining and reporting borrower credit scores and reports.
“Eighteen months ago, we stepped up our efforts and asked the 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.
Broeksmit noted MBA is making meaningful progress. “A primary reason is that we’ve found an eager ally in FHFA Director Bill Pulte, who is sharply focused on lowering borrowers’ cost and won’t let things linger in the usual D.C. way,” he said. “He not only understands the issue, but is leading with urgency and purpose as regulator of the GSEs and also chairman of both their boards of directors.”
A few weeks ago, Director Pulte directed the GSEs to begin accepting VantageScore 4.0 as an alternative to FICO. “Not both. One or the other,” Broeksmit added. “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 customer.”
Since the announcement, MBA has worked with FHFA staff and leadership at Fannie Mae and Freddie Mac to move this forward, Broeksmit said. “As you might imagine, a change of this scale doesn’t happen overnight,” he said. “But with Director Pulte’s active prodding, we are working with the GSEs as well as other stakeholders like investors, insurers, software providers and others to make implementation as smooth and swift as possible.”
Broeksmit also shared the news that MBA’s Residential Board of Governors (RESBOG) has passed a resolution calling for the end of the tri-merge credit report requirement to originate GSE loans.
“As I’ve said many times, the tri-merge is an outdated relic of a time when data was fragmented and inconsistent, leading to significant disparities between the reports that the different credit reporting agencies produce. That is no longer the case, and if anyone were designing a new system from scratch, they would never design a system with that sort of redundancies that increases costs, offers borrowers and lenders no choices and provides scant tangible benefit,” Broeksmit said.
“As we are doing with credit scores, MBA is collecting the data and meeting with all the important stakeholders to find a way forward that will increase competition in credit reporting without unduly increasing risks or disrupting the mortgage market,” Broeksmit concluded.
Watch Broeksmit’s message below:
