UWM to cover costs of hard credit pulls

United Wholesale Mortgage (UWM) will begin to cover the upfront cost of hard credit report pulls for its broker partners as it aims to expand market share.

The new initiative will ease the impact of out-of-pocket expenses for mortgage brokers after the costs for credit reports increased this year, the company said in making the announcement on Wednesday.

“We’re excited to offer credit reports at no cost to our UWM partners so they can focus on scaling their business and better serving their borrowers without the worry of increasing credit report charges,” Mat Ishbia, president and CEO of UWM, said in a statement.

The credit report must be ordered within UWM’s system for the lender to cover the cost of the upfront credit pull.

If the loan doesn’t close, the cost will be covered by UWM. If the loan closes, UWM will recoup the cost from the borrower in the closing disclosure, UWM’s website stated.

UWM’s initiative comes on the heels of increased costs for credit reports this year. 

Fair Isaac Corp. (FICO), the company that retains the right to the methodology used to measure consumer credit risk, started charging one price — higher than the price from 2023 — to all mortgage lenders this year, regardless of their volumes. The change represents a departure from the tier-based pricing structure FICO implemented in early 2023.

FICO collects a total of about $10 for all three scores from a tri-merge report that costs $50 or more, depending on the agency.

UWM was already providing soft credit pulls for brokers at no cost through its Safe Check program.

The program, which initially launched in October 2022, provided brokers with single-bureau soft credit checks on conventional loans for $10. In its updated Safe Check Complete version released in September 2023, brokers could order a prequalification based on a three-bureau soft credit check for $64, with UWM pulling the applicant’s tri-merge hard credit report at no additional cost. 

Since early 2023, Rocket Pro TPO, the wholesale arm of Rocket Mortgage, had been providing credit reports at no cost for broker partners when closing loans through the Detroit-based lender. 

Speaking to HousingWire last year, Rocket Pro TPO executive vice president Mike Fawaz said the company’s Fee Freedom initiative is designed to give the broker community “tools” to drum up business.

Regulators are moving to address credit report cost issues. In March 2023, the Federal Housing Finance Agency (FHFA) announced proposed implementation timelines for use of the FICO 10T and VantageScore 4.0 credit score models by Fannie Mae and Freddie Mac. 

The government-sponsored enterprises also plan to transition to two, rather than three, credit reports from the national consumer reporting agencies within a year.