Tag Archives: Credit Score

Lawmakers suggest that additional credit scoring models would "foster competition and innovation in the credit scoring industry." But how much of a hold does FICO really have in that area?

Those with lower credit scores who do get accepted for mortgage loans (and other types of loans) will almost certainly pay higher interest rates than those with higher credit scores; therefore, those with higher credit scores pay less over the life of the loan due to paying less interest.

Compared to the prior period, the nation’s average Borrower Health Score was up 2.8 percent to 82.2, rebounding from the third quarter’s 1.6 point drop, according to LendingTree. The Borrower Health Score is calculated using the weighted average of credit score, loan-to-value ratio (LTV), and overall “lendability” of loan seekers in each state throughout the quarter.

Despite recent gains, which some of us believe are more of a mirage than an oasis, the economy still isn't creating enough good-paying full-time jobs to drive a full recovery in the housing market. At the same time, stricter lending requirements--and a lending environment likely to get more challenging before it gets easier--are the other major headwinds that could slow down housing.

The Federal Housing Administration (FHA) issued new guidelines for manually underwritten loan applications that should improve a lender's ability to evaluate borrowers' risk and reduce credit requirement ""overlays"" that exceed FHA's lending standards. The agency says the move will help restore its depleted Mutual Mortgage Insurance Fund from which it pays claims without forcing lenders to over-tighten credit standards.

The percentage of homeowners who owe more on their mortgages than their homes are worth has declined to less than 12 percent as of the third quarter of this year, according to Lender Processing Services' (LPS) Mortgage Monitor report. While the increasing number of homeowners rising above water is good news for the market, LPS detects some tumultuous seas ahead as a cloud of problem home equity loans forms on the horizon.

Perhaps you've known someone who raised money for a documentary or civic project by making an appeal through crowdfunding on the Internet. Now, the concept of pooled resources is being used as an investment vehicle offering equity in homeownership to investors and loan assistance to selected prospective homeowners.

While rising home prices have lifted many underwater homeowners to positions of positive equity, the real estate information and analytics provider DataQuick warns tight credit will still preclude many traditional buyers from the market. Instead, investors will continue to carry an outsized portion of the purchase market for the foreseeable future, according to DataQuick.

Existing-home sales translate to an annual rate of 5.12 million at the October sales pace, according to the National Association of Realtors (NAR). October's sales volume was down 3.2 percent from September and marked the second consecutive month of declining transactions. NAR blames low inventory, diminished buying power from rising prices and interest rates, and a restrictive credit environment for the drop in sales.

It's no secret underwriting standards have tightened in recent years, and while many decry the heightened standards for making homeownership less accessible to some Americans, an economist with CoreLogic points out in a report released Wednesday that heightened standards are, without question, impacting delinquencies for the better, with 2013 vintage loans carrying a serious delinquency rate of just six basis points.