WASHINGTON — The Mortgage Bankers Association and several housing and financial services groups are urging federal regulators to revisit rules governing how lenders obtain and use consumer credit reports, arguing that current requirements are outdated and add unnecessary costs to the mortgage process.
In letters to regulators, the groups said the framework for credit reporting in mortgage underwriting has not kept pace with technological changes or shifts in the credit reporting marketplace. They contend that mandated practices — including requirements tied to legacy credit scoring models and report formats — can increase borrowing costs, slow loan approvals and limit competition among credit reporting agencies.
The Ask
The associations are asking agencies such as the Federal Housing Finance Agency (FHFA), the Department of Housing and Urban Development (HUD) and other regulators overseeing government-backed lending to modernize standards to allow lenders to use updated credit scoring models and more flexible report options.
According to the groups, current rules often require lenders to obtain multiple credit reports or use specific versions of credit scores for loans intended for sale to Fannie Mae and Freddie Mac, even when newer models may provide more predictive assessments of borrower risk. They say those requirements can lead to higher fees for consumers because lenders must purchase reports that may not be used in other types of lending decisions.
Additional Arguments
The organizations also argue that encouraging broader acceptance of modern credit scoring systems could expand access to homeownership by better evaluating borrowers with limited traditional credit histories, while maintaining prudent risk management.
Regulators in recent years have taken steps toward updating credit score requirements for federally backed mortgages, but industry groups say implementation has been slow and uneven. They are calling for clearer timelines and additional reforms to align mortgage underwriting standards with practices already common in other consumer lending markets.
