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Tag Archives: FICO

Mortgage Credit Eases as Demand Increases in Q2

The percentage of banks reporting stronger demand for mortgage loans rose in the second quarter, the Federal Reserve reported Monday, with more banks easing lending standards. Those results, revealed in the Fed's Senior Loan Officers Opinion Survey, are consistent with reports that mortgage loans are becoming easier to obtain. While the results suggest a trend in lending standards, they could be misleading: A bank which has tightened standards as much as possible may not necessarily ease them.

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Survey: 71% of Bankers Say Price Increases Are Sustainable

According to a FICO survey, 71 percent of bankers polled believe home prices are ""rising at a sustainable pace"" in the context of mortgage lending risk. On the credit health side, 39 percent of respondents expect mortgage delinquencies to fall over the next six months, while another 45 percent expect delinquencies to remain flat. Sixteen percent anticipate an increase in delinquencies, making this first-quarter survey the most optimistic since the surveys started.

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Subprime Credit Scores on the Decline

Subprime credit scores are declining across the country with strong declines in a few rebounding markets, according to Equifax. Designating credit scores below 620 as ""subprime,"" Equifax found the number of subprime borrowers decreased 2.1 percent from the third quarter of 2011 to the third quarter of 2012. The 2.1 percent translates to about 1 million Americans who rose from the subprime category. Equifax also found ""early housing-bust markets"" are experiencing improving credit scores as time passes since the worst of the foreclosure crisis.

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Risk Professionals Project Mid-2013 Trends for Credit, Delinquencies

FICO released a survey of bank risk management professionals to gather projections on where credit will be heading in the next 6 months. The study, which was conducted by the Professional Risk Managers' International Association (PRMIA), found a little more than half of risk professionals (53 percent) expect mortgage credit to meet or exceed consumer demand into the first half of 2013. In the Q4 survey, 68.6 percent of professionals also said they believe the level of 90-plus mortgage delinquencies will decrease or stay the same, representing a 7.1 decline from the previous quarter.

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CFPB Finds U.S. Consumers Overlook Credit Reports

Even though credit scores play a key role in whether or not a person can be approved for a mortgage loan, the Consumer Financial Protection Bureau (CFPB) released a report revealing only one in five people actually obtain a copy of their credit report each year. In addition, these overlooked reports that are important in the lending process could also contain errors that go unchallenged. When consumers did dispute information on their credit report, the CFPB found that nearly 40 percent of the disputes dealt with debt in collections.

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Lenders’ Risk Managers Expect Mortgage Delinquencies to Drop

FICO's quarterly survey of bank risk professionals found a reversal in the sentiment of U.S. lenders, with expectations for loan repayments more upbeat in the first quarter of 2012 than they had been during the previous quarter. The results show fewer lenders are anticipating a rise in delinquencies on home loans than at any time since FICO launched its survey in early 2010. When asked about the availability of credit, however, the credit gap persists in housing, with lenders still unsure about the real estate sector.

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Housing Crisis to End in 2012 as Banks Loosen Credit Standards

Capital Economics expects the housing crisis to end this year, according to a report released Tuesday. One of the reasons: loosening credit. The analytics firm notes the average credit score required to attain a mortgage loan is 700. While this is higher than scores required prior to the crisis, it is constant with requirements one year ago. Banks are also loosening loan-to-value ratios (LTV), which Capital Economics denotes ""the clearest sign yet of an improvement in mortgage credit conditions.""

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Major Servicers Turn to FICO to Combat Strategic Defaults

FICO announced this week that it has inked deals with four of the country's top 10 mortgage servicers to provide them with its predictive analytics technology to identify borrowers who pose the greatest risk of strategic default. Studies conducted by the University of Chicago Booth School of Business indicate that roughly 35 percent of mortgage defaults are strategic, and FICO estimates this makes strategic defaults more than a $20 billion problem annually.

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