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| Equifax is using its “market power” to make mortgage bankers and brokers purchase additional credit reports whenever “tri-merged” reports are reissued, according to an Ohio lawsuit filed against the credit repository.Equifax, which did not return MortgageDaily.com’s calls for a comment, demanded that CBC Companies Inc. sign off on an agreement that would impose Equifax’s new reissue policy on CBC, according to federal court documents filed in Columbus, Ohio, by CBC.
Equifax’s previous policy was to charge CBC only for credit reports it purchased for the creation of a tri-merged report, CBC claims. Credit reports sold by each of the three nationwide consumer reporting agencies are necessary for the production of tri-merged reports. Under its new reissue policy, Equifax reportedly said it will charge CBC the cost of a new credit report every time the company delivers a reissue, even though the reissue did not cause CBC to obtain a new credit report from Equifax. The underwriting standards employed by most consumer residential mortgage lenders preclude them from relying on copies of tri-merged reports provided by others, such as mortgage brokers, but require that lenders obtain authenticated copies of existing tri-merged reports directly from resellers, CBC explained in court documents. Resellers satisfy lenders’ need for authenticated copies by selling a new tri-merged report directly to the lender, which requires the reseller to purchase a new credit report from each of the three consumer reporting agencies; or, by reissuing the original tri-merged report. Because a reissue does not require a reseller to purchase a new credit report from Equifax or the other consumer reporting agencies, it is a less costly and preferred means of authenticating an existing tri-merged report. Michael J. Canter, CBC’s attorney, said the credit reseller does not want to buy the additional reports because they have no additional value or use and that Equifax’s new requirement “dramatically increases” the cost of doing business. In addition, CBC said it has developed technology — Global Reissue — that allows lenders to purchase reissued tri-merged reports electronically, a less costly and quicker alternative to obtaining new credit reports. However, Equifax’s new reissue policy eliminates Global Reissue by prohibiting CBC from “reissuing” a tri-merged report unless CBC originally produced and sold the tri-merged report, the company said in court documents. Canter said that one of the other credit repositories recently adopted a similar reissue policy while the other one hasn’t so far. “They want to sell you more reports every time you do a reissue,” he said. |
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Lisa D. Burden is a legal analyst for MortgageDaily.com and holds a law degree from the University of Maryland. She is currently a freelance journalist who previously wrote for Institutional Investor publications and the Baltimore Daily Record. e-mail Lisa at: burdenlisa@yahoo.com |
