Respected real estate and housing finance reporter Kenneth R. Harney asks: "But are lenders lately playing a numbers game with consumers -- claiming they're willing to accept lower [FICO credit] scores while actually approving applicants with higher scores on average than they did last year or even earlier this year?" Kenneth R. Harney, "Real Estate / Lenders Say They're Easing Mortgage Terms. But Statistics Suggest Otherwise." (Washington Post Online Wednesday, September 9, 2015).
Harney's answer in the end: "[T]he statistical evidence suggests that, on average, it is increasingly people with higher scores, not lower, who are making the final cut." Id.
The trend toward mortgage lenders putting their emphasis on high credit scores is perplexing in view of the business model of making conventional mortgage loans. Did you know that the conventional mortgage loans business model involves making loans to relatively low-creditworthy applicants, making your profit, and then making more profit by selling the loan to Fannie Mae, Freddie Mac, or the FHA? Well, it is. See id. Which, to say again, makes the increasing emphasis on ever-higher credit scores a perplexing thing. There must be something behind the available evidence that we cannot see, yet.
Nothing new there.
Please Read The Disclaimer. ©2015 by Dennis J. Wall, author of "Lender Force-Placed Insurance Practices" (American Bar Association 2015). All Rights Reserved.
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