Homebuyers face 91% increase for mortgage credit reports starting Jan. 1

This past Monday morning I choked on my coffee after reading a price increase notification letter from Equifax Mortgage Services, my firm’s former mortgage credit reporting vendor.

Starting Jan. 1, the notice said, a FICO-scored joint (spouses) credit report is rising to $74.53 from $39.01. That’s a 91% price increase or nearly double the price. Say what?

But wait, it gets worse.

Terry Clemans, executive director of the National Consumer Reporting Agency, sent me a letter confirming the vast majority of the mortgage lending industry will most likely incur “a massive mortgage credit report price increase in 2023.”

“This is a paradigm shift in the pricing structure for credit scores and is being dictated to the mortgage credit reporting industry from all three national credit bureaus and/or FICO,” the letter states.

The pricing, which will be tiered, includes a wholesale price increase of less than 10% for the top tier of roughly 46 lenders, about 200% for six lenders in the middle tier, and more than 400% for all other mortgage lenders in the nation,” NCRA’s letter continues. None of the lenders were named.

In the bigger picture, this is a disastrous omen for anybody buying, selling or refinancing a property.

The sudden jump in prices is an unspoken green light from mortgage regulators and policy writers for every other real estate settlement provider to consider a similar tactic. In other words, if credit-score companies can hike fees, then what’s to stop others, like underwriters,  from following suit?

How FICO’s credit scoring system works

Front and center in the mortgage loan approval process is a credit report pulled by a mortgage loan originator. The report will come from all three credit bureaus (Experian, Equifax and TransUnion) and include their accompanying FICO credit scores.

Lenders typically use the lowest middle FICO score to either approve or deny a loan and loan …read more

Source:: Los Angeles Daily News

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