To piggyback on our last blog, a statement from the National Consumer Reporting Association (NCRA) sounded the alarm of sharp price increases for purchasing credit reports. The surprising fact to me is the vast discrepancies in who is charged and at what percentage the charges will increase. The NCRA stated, “the vast majority of mortgage lenders will incur price increases ranging from 10% to 400%.” This statement came out in late November of 2022. And if you are a mortgage originator, I’m certain you’ve already felt the pinch.
At that time the Fair Isaac Corp. (FICO) stated that there will be three tiers to this increase for “mortgage credit reports.” FICO states; “a wholesale price increase of less than 10% for the top tier of approximately 46 lenders, about 200% for approximately six lenders in the middle tier, and more than 400% for all other mortgage lenders in the nation.” It’s thought that this tier base is determined primarily on volume-based and/or the overall amount of business generated by lending organization.
Unfortunately, I cannot locate any publication that states a clear reason as to why this new pricing structure was so drastically changed. And the most disturbing part are the smaller lending organizations are getting hit harder in a mortgage environment that is already struggling and competitive. Federal Law does state that Lenders can invoice their clients upfront for credit reports. But most lenders eat the costs of these reports as a cost of doing business.
As I mentioned in the beginning of this blog, now more than ever, it’s time to put pressure on the Federal Housing Finance Agency, Fannie Mae, and Freddie Mac to act in a much quicker fashion in implementing the VantageScore 4.0 to compete with the monopoly of FICO. If you missed the last blog, click here.
