Articles Tagged with ''Credit score''

Introducing the Newest Form of Fraud - And it's Legal (For Now)

A reader forwarded me a story yesterday than just had my jaw dropping -- borrowers can apparently rent someone else's credit to raise their own credit score, essentially using a loophole in today's credit rating system to their advantage. Imagine paying $1,800 to move your credit score from 550 to 715, in less than one month. Read that again. And then shudder, especially if you work in the mortgage industry, because it's absolutely true. And, for now, it's absolutely legal.
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Fitch: Do FICO Scores Matter?

While rising mortgage defaults are to be expected during a housing market downturn, the sharp rise in U.S. subprime mortgage defaults -- combined with a collapse in available subprime credit -- is an event that is gaining strong attention from regulators and rating agencies alike. In a new report, Fitch Ratings tackles the collateral attributes that contribute to early default activity in subprime mortgages underlying RMBS issuances. Generally, Fitch noted that there is typically a lag between the slowdown in home price growth and a rise in mortgage defaults. However, the rating agency's analysis found that the severe response of the 2006 subprime vintage to the cooling housing market is attributable to high borrower leverage, as well as the widespread use of stated income loan programs.
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Study: 70 Percent of EPDs Linked to Fraud

More than 70 percent of early payment defaults can be linked to a significant misrepresentation on the original loan application, according to a new study released today by BasePoint Analytics. The study concluded that loans containing egregious misrepresentations were up to five times more likely to default in the first six months than loans that did not; more importantly, the study concluded that predictive models could be deployed early in the loan process to help lenders predict which loans were likely to default within the first six months, enabling the loans to be rejected pre-funding.
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