Tag Archives: FICO

A new quarterly survey of bank risk professionals from FICO paints a decidedly pessimistic picture of housing's future. The company describes its latest results as a reversal of the growing optimism seen in late 2010 and early 2011. The survey shows that bankers expect mortgage defaults and foreclosures to remain elevated for at least five more years, and housing prices nationally to hold below the pre-crisis levels of 2007 until the year 2020.

Last year, banks seized more than one million properties. Lax underwriting standards during the boom years served as the catalyst for a housing bust that upended not only the mortgage market but the entire U.S. financial system, and has left scores of foreclosures, delinquencies, and vacant homes in its wake. In order to see what changes the lending community has made, the ratings agency DBRS decided to do a side-by-side comparison of the criteria for obtaining a prime mortgage in 2007 versus today's requirements for prime qualification.

FICO's second-quarter survey of bank risk professionals reveals pessimism in regards to expected mortgage delinquencies in the second half of 2011. While 46 percent of respondents expected mortgage delinquencies to rise over the next six months, 18 percent expected them to decline. The numbers were similar in regards to delinquencies on home equity lines of credit, where 46 percent of respondents expected delinquencies to rise, while 22 percent expect them to decline. Bankers were somewhat optimistic about consumer credit.

As home prices began heading further and further south, the term ""strategic default"" made its way into industry jargon...and into the minds of lending and servicing professionals already struggling to keep up with large volumes of borrowers who actually can't afford their mortgage payments. It's a fairly new phenomenon that the industry agrees needs addressing, but the problem is, how do you pinpoint a strategic defaulter? The credit assessment firm FICO says it's developed a method, using consumer behavior analytics, that will allow lenders to identify borrowers who might walk away.

The credit analytics firm FICO has released the results of its fourth-quarter survey of bank risk professionals. The consensus is that lending will remain tight well into next year and a greater number of banks could face failure, but fewer bankers believe delinquency rates for home loans will keep rising. But FICO says until lenders put the problems in their mortgage portfolios behind them and see sustained growth in employment, the significant gap between credit demand and credit supply is unlikely to close.

FICO announced this week that its newest credit scoring product, the FICO 8 Mortgage Score, is now available from all three major U.S. credit reporting agencies. The FICO 8 Mortgage Score was built specifically to help mortgage lenders better predict mortgage performance and improve credit decisions for both current and prospective homeowners. The company says it will allow lenders to employ a more precise risk assessment tailored for today's real estate market in order to reduce the likelihood of default.

Analytics provider FICO recently announced that Experian Capital Markets is adding FICO credit scores to its CreditHorizons for Securities solution. Sellers and investors of mortgage-backed securities (MBS) use Experian's CreditHorizons for Securities to surmount the limitations of loan-level data when analyzing credit risk in potential bond investments. FICO says the addition of the FICO score will give securities managers, marketers, and investors deeper insight into the creditworthiness of underlying mortgages in loan pools.

Nearly one-third of Americans are unlikely to qualify for a mortgage because their credit scores are too low, making homeownership out of reach for many, according to the online real estate marketplace Zillow. The company analyzed more than 25,000 home purchase requests during the first half of September and found that borrowers with credit scores under 620 were unlikely to receive even one loan quote, even if they offered a down payment of 15 to 25 percent.