Freddie Mac gives lenders access to more merged credit-report vendors

Freddie Mac is increasing the number of companies offering merged reports from the credit bureaus through integrations with its Loan Product Advisor automated underwriting system.

"They've opened it up so that there's more availability and more competition," said David Chiappe, president of SharperLending, a vendor that recently received approval to offer merged credit reports through LPA. Sharper Lending is a supplier of merged reports to wholesale mortgage lenders.

Equifax, which revealed a major consumer data breach in 2017, was originally the only one of the three credit bureaus to offer merged credit reports and the only one integrated with Freddie's system, according to a New York Times article.

Now there are other lenders such as SharperLending and MeridianLink listed on Freddie Mac's website.

Both Freddie and Fannie Mae say they work to diversify vendor options whenever possible.

Researchers from the Urban Institute's Housing Finance Policy Center raised questions last year about whether the practical need for merged reports from the three credit bureaus still exists.

Merged reports originally were used because of geographic specialties and other differences between the credit bureaus, but data provided by the three credit reporting agencies is more similar today, researchers Karan Kaul and Laurie Goodman noted in a report last year.

"All three CRAs have a national footprint with nearly identical data and borrower coverage. Some minor variations might exist, but they are unlikely to be material," the researchers said.

Some lenders in the broader consumer credit market such as credit card companies and auto lenders do not use tri-merged reports, but they remain a standard practice in the traditional first-lien mortgage market.