The American financial system is powerful but fragile It is an intricate engine that depends on accurate, reliable data to sustain confidence from banks to borrowers to investors. When that data breaks down, the consequences are immediate and far-reaching.

We saw that firsthand during the housing crisis of 2008, when unreliable or incomplete information in the mortgage underwriting process triggered a chain reaction of defaults that ultimately forced a historic taxpayer-funded bailout.

Fortunately, today’s lending environment is far stronger because of those hard-learned lessons. Over the past 15 years, policymakers, regulators, and market participants have rebuilt the guardrails that protect the housing market and the broader economy from the kind of cascading risk seen in 2008.

That discipline has helped restore market confidence, making the system more resilient to global shocks and economic downturns.

One of the most important of those guardrails is the use of tri-merge credit reports in mortgage underwriting. In simple terms, this is the standard process requiring lenders to pull credit reports from all three major credit bureaus before making a loan decision. By combining these sources, lenders get a more complete and more consistent picture of a borrower’s financial history.

For years this essential safeguard has served as a structural defense against risk that has kept America’s mortgage market remarkably stable even amid broader economic swings. Yet today, some in the industry argue that lenders could rely on just one or two credit reports instead. That would be a mistake.

Proponents assert that ending tri-merge would be an efficient way to mirror the due diligence practices associated with other forms of consumer lending, but mortgages, of course, are not like car loans or credit cards. Equating the two ignores the layers of legal, investor, and secondary market obligations that demand a higher level of diligence.

 Auto and personal loans are shorter-term and lower-dollar; mortgage lending, by contrast, is long-term, high-value, and deeply intertwined with broader capital markets. A single default can cost tens of thousands of dollars. Multiply that by millions of loans, and the implications for systemic stability become clear.

One reason mortgage delinquencies have remained near historic lows, even as other forms of consumer debt have risen, is that the tri-merge framework enforces underwriting discipline. It ensures that no single data gap or reporting discrepancy can distort a borrower’s credit picture. That redundancy, far from being wasteful, is precisely why the system has stayed sound.

The investor implications are just as profound. Weakening the tri-merge model would distort how credit risk is priced, creating new inefficiencies across the bond and mortgage-backed securities markets. Accurate credit data allows investors to assess risk and set yields that reflect reality. Reduce that visibility, and the pricing signal becomes blurred.

Analysts estimate that a shift to a bi-merge model could introduce billions in unpriced risk into the mortgage ecosystem, reducing interest income for investors by as much as $9 billion. Pension funds, insurance companies, and retail savers who depend on the stability of mortgage-backed assets to invest for the future would all feel the effects.

Markets abhor opacity. When underwriting depends on partial data, misjudged risk doesn’t disappear—it shifts. Investors demand higher returns to compensate, raising borrowing costs for consumers. And when those risks eventually surface, they don’t stay in the private sector; they migrate to the public balance sheet.

Nearly 70 percent of new U.S. mortgages are ultimately purchased by Fannie Mae and Freddie Mac, meaning that any degradation in credit quality that results in additional defaults is eventually borne by taxpayers. The tri-merge model keeps that moral hazard in check by ensuring that risk is properly identified and contained.

It’s to the credit of FHFA Director Bill Pulte—and by extension, the Trump Administration—that they have reaffirmed this critical safeguard rather than dismantling it as was proposed under the Biden Administration.

At a time when some in the industry have been eager to cut corners under the guise of efficiency, the Administration’s continued support for the tri-merge model reflects a broader understanding of how resilient credit markets are built.

Financial strength doesn’t come from simplification; it comes from sound structure and complete information. In choosing to preserve this pillar of financial resiliency, federal regulators have sent a clear message: short-term convenience should never outweigh systemic stability.

There’s nothing wrong with pursuing innovation in credit analytics—if anything, lenders should continue finding responsible ways to expand access to credit through better, more inclusive data. But progress shouldn’t come at the expense of prudence.

Removing one of the three data sources that anchor America’s mortgage underwriting process would make the system less transparent, less stable, and ultimately less fair to consumers and investors alike.

Financial markets thrive on confidence, and confidence depends on information. The tri-merge model ensures that information is complete, verified, and reliable. Dismantling it would not streamline lending or promote competition; it would reintroduce the same blind spots that once destabilized the global economy.

For the sake of borrowers, investors, and taxpayers, we should keep this pillar of financial resilience exactly where it belongs—at the heart of America’s mortgage system.

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Michael Busler is a public policy analyst and a professor of finance at Stockton University in Galloway, New Jersey, where he teaches undergraduate and graduate courses in finance and economics. He has written op-ed columns in major newspapers for more than 35 years.