Pulte's FHFA to ease credit data rule for Fannie, Freddie

The Federal Housing Finance Agency is planning to direct Fannie Mae and Freddie Mac within weeks to require lenders to pull credit data from two major credit reporting bureaus instead of three, according to a person familiar with the plans. 

The new requirement could be announced by FHFA Director Bill Pulte as soon as Oct. 12, when he is scheduled to speak at a mortgage industry conference in Chicago, according to the person. 

Three companies – Equifax Inc., Experian Plc and TransUnion – dominate the credit reporting industry, and loans sold to Fannie and Freddie are currently required to include a credit report combining financial data from all three, known as a tri-merge report.

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Pulte has repeatedly called on the credit bureaus and FICO to cut fees in a bid to bring down loan closing costs, as the Trump administration tries to get a handle on the housing affordability crunch posed by high home prices and rising mortgage rates. Pulte said the agency was "seriously considering bi-merge" in a social media post Sept. 3.

TransUnion shares fell 4.7% and Equifax dropped 5.9% at 4:56 p.m. during after-hours trading in New York on Thursday.

Officials at FHFA didn't immediately respond to a request for comment. 

The agency initially announced plans to shift to a bi-merge report during the Biden administration, but the move was delayed amid concerns about accurately pricing risk in the mortgage market.

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"We encourage you to abandon plans to transition from a tri-merge to the bi-merge credit report," eight Senate Banking Committee Republicans wrote in a letter to then-FHFA Director Sandra Thompson in October 2023. "We cannot afford a reduction in the accuracy and predictive power of data provided to the taxpayer-backed Enterprises with no meaningful benefits for consumers."

The new requirement will likely take effect within one to three months of its announcement, according to the person familiar. 

The blow to the three major credit reporting companies comes after Pulte blessed the use of credit scores by VantageScore, a joint venture of the bureaus.

In a move that could bring more low-income borrowers into the housing market, Pulte earlier this week announced that Fannie and Freddie would use one pricing grid that treats VantageScore 4.0 scores as equivalent to Classic FICO scores. That would require nixing the grids the government-sponsored enterprises had released three weeks earlier, which treated VantageScore scores as overstating a borrower's creditworthiness by about 20 points relative to FICO. 

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Fannie and Freddie, the government-controlled companies underpinning the mortgage market, buy loans and wrap them into securities to sell to investors. They use pricing grids to set upfront fees on the mortgages they acquire.