The nation's independent credit-reporting agencies have handed together to try to prevent some erosion of their business.
Lenders are increasingly eager to use less-costly credit reports when checking on potential borrowers, and one route is simply to merge the files of the three national repositories into a single electronic file.
The independents say they do better because they know their local markets and choose the best reports, then do further updating and checking. They then supply the enhanced reports, known as Residential Mortgage Credit Reports, or RMCRs, to their lender customers.
Freddie Mac normally requires the use of RMCRs. But the independents say that Freddie has been letting some large lenders use merged files from Trans Union Corp., TRW Inc., and Equifax Inc. A Freddie Mac spokesman confirmed that it was willing to allow merged files in negotiated transactions.
Broader use of merged files would make it hard for many independents to stay in business, since affiliates of the repositories would have a pricing advantage and the independents would have no enhancement to justify a markup.
The independents appear to be on their way to one smaller victory, though. They have complained that some affiliated agencies are giving away prequalification reports in exchange for getting to do the full reports when the time comes. This, the independents say, is in violation of the Real Estate Settlement Practices Act. It also puts the independents at a competitive disadvantage.
The Department of Housing and Urban Development, asked for its opinion, has decided that such giveaways are violations. David Williamson, Respa staff director, said the agency would circulate a letter on the subject to interested parties in a few weeks.
The new agency group, the Indianapolis-band National Association of Independent Credit Reporting Agencies, now has 70 members. Its executive director, William Greene, says the group is growing fast and will have 100 members by the end of this year and 200 or more by the end of 1994.
A federal court has dismissed a case brought by the Mortgage Bankers Association challenging last year's Respa regulations on the ground that. HUD's revised regulations "may effectively resolve all of the issues."
But the United States District Court for the District of Columbia left the door open for the association to reactivate the case by June 1, once HUD has issued the regulations.
In an order dated Nov. 19, the court also urged the agency to issue those regulations "within the shortest possible time."
Warren Lasko, executive vice president of the association, said his group was pleased with the decision, noting it is now able to resume discussions with HUD on the regulations.
