Does the Mortgage Industry Rely Too Heavily on Credit Scoring Models?

Few factors affect the mortgage lending process as much as a borrower's credit score. Mortgage bankers and their Wall Street counterparts have long relied on the FICO score to judge the ‘credit worthiness’ of the borrower. When determining pricing on the sale or purchase of millions of dollars of mortgage loans, quantitative analysts known as tape crackers use the individual credit scores as one of the primary data points considered in their pricing models. For individual borrowers, their credit score at the time of loan application has a major influence over the amount of interest they pay or the next 30 years, not to mention the amount of cash required to close and whether or not they even qualify for the loan. Because of this, credit profiles and their impact on risk-based loan...(read more)

Forward this article via email:  Send a copy of this story to someone you know that may want to read it.

Source: http://www.mortgagenewsdaily.com/channels/news/193464.aspx

Mortgage Crisis Real Estate Agents Housing Market Mortgage