03-08-2017, 12:49 PM
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Senior Member
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Join Date: May 2009
Location: SF east bay
Posts: 4,455
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New phony credit rating program
Yep, looks like a new housing bubble program is going into effect. We didn't learn from 2007 so maybe it's here we go again time.
Quote:
washingtonpost.com
Many mortgage applicants will get a surprise boost in their credit scores
By Kenneth R. Harney
It could be a boon for some home buyers — their credit scores will get a surprise boost — but worrisome for mortgage lenders, landlords and others who depend on credit reports to evaluate their potential customers.
In a little-known policy shift, the three national credit bureaus — Equifax, Experian and TransUnion — plan to stop collecting and reporting substantial amounts of civil judgment and tax lien information on public records affecting millions of American consumers starting July 1.
Both types of information have negative impacts on credit scores and remain in credit files for extended periods. Tax liens are levied against properties when the owner is delinquent on payment of taxes. Civil judgments — debts owed by the losing party in legal disputes that typically involve monetary damages — are ordered by courts.
With the elimination of this information from vast numbers of consumer credit files, some lenders are concerned that when they order credit reports to evaluate an applicant, they may no longer get the full picture of the risk of nonpayment posed by the consumer.
David H. Stevens, president and chief executive of the Mortgage Bankers Association, told me that if tax lien and civil judgment data is suppressed from credit reports, “it’s unclear whether creditors will be able to make informed decisions” about loan applicants. Stevens said that blocking this information will raise some applicants’ credit scores artificially, creating “false positives” that make individuals appear lower risk than they are.
A study by Vantage Score Solutions, a credit scoring developer created by the three credit bureaus, estimated that 8 percent of consumers would see an average score increase of 10 points on its most widely used scoring model if all civil judgments and tax liens were removed from credit reports. Stevens said 8 percent and 10 points may sound small, but in the mortgage business they equate to significant numbers of applicants.
Terry W. Clemans, executive director of the National Consumer Reporting Association, a group that represents companies that provide credit reports for mortgage lenders, said home buyers “who are on the edge” — they need a score increase to get approved for a loan or obtain a better interest rate — “may be of higher risk than [lenders] are aware after this data is removed.”
Tim Coyle, senior director of real estate and mortgage for LexisNexis Risk Solutions, a large data and technology company that sells creditors data on public records including judgments and tax liens, told me in an interview that an internal study by his firm found that borrowers who have a judgment or a tax lien are 5½ times as likely to end up in serious default or foreclosure as are borrowers who don’t have such items in their files.
The three national credit bureaus have been tight-lipped about the details of their July 1 changes. Mortgage lenders say they have heard nothing from the three bureaus and are in the dark about the possible ramifications. Stevens told me that “nobody” in the mortgage industry “knows about this.”
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Russians who vote elect Republicans
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