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Tag Archives: FICO

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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Foreclosure Woes to Plague Industry for at Least Five Years: Survey

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.

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Prime Mortgage Requirements: Then vs. Now

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.

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Bankers Pessimistic About Future of Mortgage Delinquencies

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.

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FICO Profiles the Strategic Defaulter

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.

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