Mortgage
originators
will
pay
more
to
access

consumer
credit
reports
in
2024,
reigniting
complaints
from
mortgage
lenders
and
trade
associations. 

In
2024, Fair
Isaac
Corp.
(FICO),
the
company
that
retains
the
rights
to
the
market’s
adopted
methodology
to
measure
consumer
credit
risk,
will
charge
one
price
–
higher
than
the
current
price
–
to
all
mortgage
lenders,
independent
of
their
volumes.
The
change
represents
a
departure
from
the
tier-based
pricing
structure
it
implemented
in
early
2023.

FICO
will
also
collect
the
same
per
score
price
for
soft
pulls
and
hard
pulls
next
year,
an
initiative
that
started
in
2023
despite
significant
differences
in
these
products.

“FICO
will
collect
approximately
$10
total
for
all
three
scores
out
of
a
$50
(or
more)
tri-merge
report
and
score
bundle,
which
continues
to
constitute
a
low
percentage
(approximately
20%
or
less)
of
the
overall
cost
of
a
tri-merge
report,”
a
spokesperson
for
FICO
wrote
in
a
statement
to
HousingWire. 

For
2023,
FICO
said
it
would
collect
approximately
$2
to
$8
for
all
three
score
tiers
out
of
a
$40
to
$50
(or
more)
tri-merge
report
and
score
bundle
and
out
of
an
average
$3,800
in
closing
costs.
Compared
to
2022,
mortgage
lenders
in
2023
saw
a price
increase
between
10%
and
400%,
mortgage
trade
groups
and
other
stakeholders
said. 

For
2024,
two
mortgage
executives
who
spoke
on
the
condition
of
anonymity
for
fear
of
retaliation,
told
HousingWire
that
they
expect
prices
to
increase
by
more
than
double
in
some
cases.
Ultimately,
the
sources
added
that
lenders
will
charge
more
to
their
borrowers,
who
are
already
facing
affordability
challenges. 

“It
seems
like
only
yesterday
you
could
pull
a
single
borrower
tri-merge
for
$15
and
a
joint
for
$30,”
Greg
Sher,
Managing
Director
of

NFM
Lending,
wrote
in
a

LinkedIn
post
that
went
viral
in
the
mortgage
industry.
“Now
those
prices
will
be
in
the
neighborhood
of
$50
and
$100
respectively
— one
well-known,
widely
used
credit
reporting
agency
plans
on
charging
$75/$150.
For
clarification
purposes,
every
IMB
uses
3rd
party
vendors
(also
known
as
credit
reporting
agencies).”

Scott
Olson,
executive
director
at
the Community
Home
Lenders
of
America (CHLA),
said
that
increasing
prices
in
this
difficult
economic
environment
will
“only
make
it
difficult
for
borrowers
to
participate
in
the
American
dream.”

Soft
and
hard
pulls 

Another
change
for
2024
is
related
to
the
pricing
structure
of
soft
pulls,
which
are
performed
to
provide
pre-approval
letters,
only
visible
to
the
borrower
and
without
impacts
on
credit
scores.
Its
prices
will
come
closer
to
those
applied
to
hard
pulls,
which
are
recorded
on
the
borrower’s
credit
report,
visible
to
anyone
and
can
trigger
leads. 

“Last
year,
we
implemented
a
tier-based
pricing
structure
for
mortgage
originations,
and
FICO
collected
the
same
per
score
wholesale
price
for
most
soft
pulls
as
hard
pulls,
but
some
lenders
qualified
for
a
lower
price
in
certain
cases
for
some
soft
pulls,”
the
spokesperson
for
FICO
told
HousingWire.
 

Brendan
McKay,
president
of
advocacy
at
the
mortgage
broker
group Association
of
Independent
Mortgage
Experts (AIME),
complained
FICO
doubled
the
cost
of
hard
pulls
at
the
beginning
of
2023. 

“Now
they
are
charging
the
same
amount
for
a
soft
credit
pull,
an
inherently
inferior
product
that
provides
less
actionable
information
than
a
hard
credit
pull.
There
has
been
no
justification
given
for
the
increased
expense.”

According
to
McKay,
the
cost
burden
will
be
passed
directly
onto
consumers,
and
those
from
underserved
communities
will
feel
it
most. 

“Despite
being
a
private
institution,
FICO
is
currently
a
critical
component
in
the
mortgage
process.
As
an
industry,
we
owe
it
to
future
homeowners
to
bring
attention
to
the
misuse
of
power,”
McKay
said.  

Fannie
Mae and Freddie
Mac
are

moving
away
from
the
current
Classic
FICO
credit
score
model,
requiring
lenders
to
use
two
credit
scores

generated
by
the
FICO
Score
10
T
and
the
VantageScore
4.0
models,
which
are
considered
more
inclusive
than
their
predecessor.

Price
to
originators 

A
FICO
representative
said
the
company
does
not
set
the
retail
price
for
end
users.

Ultimately,
“Anything
above
these
wholesale
prices,
charged
as
part
of
a
tri-merge
score
and
report
bundle,
is
collected
and
retained
by
others
who
sell
and
distribute
the
scores,”
the
spokesperson
said. 

Credit
bureaus,
which
work
with
the
FICO
model,
may
pass
the
FICO
price
increases
to
their
clients. 

TransUnion
and

Experian
did
not
reply
to
a
request
for
comments. 

Meanwhile,
a
spokesperson
for

Equifax
wrote
to
HousingWire
that
beginning
in
January
2024,
it
will
have
a
price
adjustment
to
“reflect
cost
increases
from
third-party
providers
of
credit
reports
and
credit
scores.” 

However,
the
spokesperson
added,
“Equifax
is
sensitive
to
the
impact
these
third-party
cost
increases
may
have
on
customers,
especially
given
current
market
conditions.
With
this
in
mind,
Equifax
is
not
increasing
the
costs
related
to
the
Equifax
credit
file
component
of
the
tri-merge
credit
report
for
2024.”

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