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Thursday, August 28, 2014

Credit Reports: RMCR versus Tri-Merge

Upon reviewing and updating our Post-Closing Quality Control Plan, we noticed that it says we must obtain Residential Mortgage Credit Reports (RMCRs) when auditing our files. Is this correct or can we use Tri-merge Credit Reports?

Yes, you may obtain Tri-merge Credit Reports instead of RMCRs as part of your Post-Closing Quality Control Program. The following are the requirements per HUD, Freddie Mac, Fannie Mae and VA.

A new credit report must be obtained for each borrower whose loan is included in a Quality Control review; unless the loan was a streamline refinance or was processed using a FHA approved automated underwriting system exempted from this requirement. A credit report obtained for a Quality Control review may be a Residential Mortgage Credit Report, a three repository merged in-file report or, when appropriate, a business credit report. [HUD Manual 4060.1 Mortgage Approval Handbook, Section 7-6, E1. (08-06)]

Freddie Mac
For Loan Prospector Mortgages, the Seller is not required to obtain a new credit report.  For one out of every ten Non-Loan Prospector Mortgages selected for post closing quality control reviews, the Seller must obtain either a new Residential Mortgage Credit Report or a three-repository merged in-file credit report. For the remaining Non-Loan Prospector Mortgages in the Seller’s post closing quality control sample, the Seller must obtain new in-file credit reports containing information from one or more of the national repositories. [Freddie Mac Single Family Seller/Servicer Guide, Section 48.5, (c) (05/15/12)]

Fannie Mae
For all loans selected via the random selection process (and for loans selected through the discretionary selection process, as applicable), the post-closing QC review must include reverification of the borrower’s credit history. If a borrower’s credit was evaluated by using a traditional credit report, the lender must reverify the borrower’s credit history by obtaining a new tri-merge credit report. [Fannie Mae Single Family, 2013 Selling Guide/Part D, Ensuring Quality Control, Section D1-3-02 (07/30/2013)]

Reordering of a new credit from another credit source. Report may be a RMCR or an in-file report which merges the records of the three national repositories of credit files, commonly know as a 3-file merge. [VA Lender Handbook, Chapter 1, 15-1Review of Loans (09/15/2014)]

Bruce Culp
Director/Quality Control & Loan Analytics
Lenders Compliance Group