Broeksmit Addresses Tri-Merge Requirement in Wall Street Journal Letter to the Editor

The Wall Street Journal published a letter to the editor Wednesday from Mortgage Bankers Association President and CEO Robert Broeksmit, CMB, on the subject of letting mortgage lenders underwrite some loans based on a single credit report.

Broeksmit’s letter, titled Bad Policy Made Housing Unaffordable, says MBA is simply asking the Trump administration to reform an outdated system.

“Your editorial opposes my organization’s suggestion that Fannie Mae and Freddie Mac let mortgage lenders underwrite some loans based on a single credit report (Another Bad Housing Idea, Review & Outlook, March 24),” Broeksmit said.

“The current requirement that lenders use three credit scores—known as tri-merge—is an anachronism and adds unnecessary costs to borrowers. By letting the credit bureaus control the market, the government has let them raise prices on borrowers without any competition. Since 2021 the price of an individual credit report has risen astronomically—roughly 400%. Yet research from the American Enterprise Institute shows that the credit scores from each individual bureau predict default risk equally as well as the tri-merge and that a simple business rule to prevent lenders from gaming the system, such as randomly selecting a single bureau score, results in sound credit decisions while lowering costs for consumers.”

“The Journal is worried about the return of subprime loans, but our proposal explicitly prevents that. We are calling for a single credit report only for borrowers with a credit score above 700. We still support requiring three credit reports for loans with elevated risks to protect Fannie and Freddie and the taxpayers who back them. Fortunately, 80% of the loans they back have credit scores over 720, and only 7% have scores below 680. Most potential homebuyers would get relief from a single report; but all borrowers benefit from making the bureaus compete.”

“The government has made homebuying more expensive than it has to be. We are simply asking the Trump administration to reform an outdated system so that Americans can save money—without burdening taxpayers,” Broeksmit’s letter to the editor concluded.