Cheap rates might get easier … or maybe not

From the NYT:

A Focus on Credit History for Mortgage Approvals

Fannie Mae announced on Monday that it would soon start taking a longer view of consumer credit histories when evaluating mortgage applications, a change that could help some borrowers and hurt others.

Beginning in mid-2016, Fannie Mae will require lenders to use what is known as “trended credit data” when submitting loan applications through the agency’s proprietary automated underwriting system, Desktop Underwriter. This widely used automated system can quickly tell lenders whether a borrower is eligible for a conforming loan and under what conditions.

Fannie Mae now requires a “tri-merge” credit report reflecting data from the three major credit bureaus — TransUnion, Equifax and Experian — for all mortgage applications, said Chris Cartwright, the president of information services nationally for TransUnion. That data, he said, is really a point-in-time “snapshot” of the borrower’s open credit balances and any delinquencies at the time the credit was pulled.

The trended data product developed by TransUnion and to be used by Fannie Mae (along with trended data from Equifax) will provide more of a credit chronology. It will go back 30 months, showing whether payments were made on time, and more important, whether borrowers tend to carry balances from month to month, pay more than the minimum or pay off balances in full.

Studies by TransUnion have found that consumers’ paying habits are key indicators of risk. Consumers who carry revolving credit balances, for example, have been found to be considerably higher credit risks than those who pay off their balances every month. Using this richer, longer-term data “allows the credit reporting agencies to score more consumers and to score them more accurately,” Mr. Cartwright said.

TransUnion’s research estimates that the widespread use of trended data could increase the share of consumers in the “Super Prime” risk tier — those who have access to the lowest-priced credit products — to nearly 21 percent of the population from 12 percent. It is already a popular tool for evaluating auto loan and credit card applicants, according to Steve Chaouki, TransUnion’s executive vice president at the financial services business unit.

John Ulzheimer, a credit expert who has previously worked for the credit-scoring companies FICO and Equifax, said the use of trended data will lead to “smarter” mortgage lending, because it will help lenders more precisely link pricing to risk. But, he noted, it won’t work to all borrowers’ benefit. “Trended data could also mean you’re going to do worse,” he said.

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19 Responses to Cheap rates might get easier … or maybe not

  1. Grim says:

    Last thread – I always like when they design bathrooms with absolutely no storage space at all.

    Awesome freestanding tub, but where do you keep the towels and preparation H?

  2. Grim says:

    That window sill is pretty much full at this point, guess you waddle down the hall when you run out of TP.

  3. Essex says:

    Good eyes. Some poor bastard down the street from me is trying to sell (for a second time) got his taxes down from 17k to 14k……that should do it.,-74.254178,40.80283,-74.276709_rect/15_zm/

  4. phoenix1 says:

    1 Grim,
    Preparation H is best left on the counter for all of your guests to see.
    Set the tube on the top of a copy of your local tax bill…..

  5. leftwing says:

    3. SX

    Had someone approach me on buying a business 2009ish, the facility was a key component. He kept going on about how great it would be to own it. Initial diligence revealed it was on a long term lease and fixed costs were about $30k a month.

    Had a heart to heart with the fellow. While he thought he was selling me a facility I pointed out it felt more like I was taking on $360k annually of liability.

    With $14k of taxes on $389k home ringing in at about 4% this sounds the same. The seller is not transferring an asset per se, but offloading a mandatory and permanently rising liability. Good luck.

  6. Ragnarian the Magnificent says:

    And these is about wealthy people that don’t pay their taxes.

  7. The Great Pumpkin says:

    7- Rags and lefty type see nothing wrong with wealth accumulation in a capitalist system. Nah, nothing could go wrong when 1% of the population enjoys all the growth.

    “One woman—who formerly worked for Greenpeace and came to wealth management only by following her boyfriend to Switzerland and taking a job in his father’s firm—was still new enough to the profession to be deeply shocked by the extent of privilege enjoyed by her clients, many of whom possessed fortunes rivaling the GDPs of whole countries. These people, she said, are “above nationality and laws.” Asked to give an example, she related the story of an in-person consultation with a client who seemed to have found a way to ignore the laws of multiple countries with no negative consequences. The client was so powerful that he was able to extend this immunity from the law to this wealth manager and her boss, at least for the duration of time they were working for him:”

  8. The Great Pumpkin says:

    8- That passage alone is evidence enough that you should be voting for Bernie. If he indeed gets the vote, he will prob get assasinated for the type of change he brings to the table.

  9. Essex says:

    5. Sadly there is some truth to that.

  10. 3b says:

    Pumpkin vote for Bernie but you still are fine with high property taxes. Still don’t get it. Great schools?? Well I can tell you after having 2 kids go through what is deemed to be one of the best school systems in Bergen county the schools are no big deal. And my kids were in all honors a A P classes. Wait till you younger parents find, out what a scam the so called great schools are.

  11. phoenix says:

    All American kids can be replaced with h1-b visa workers for less money anyway. Lowest common denominator wins.

  12. Essex says:

    11. it’s interesting around here as each town has a completely different identity. The schools are a part of it of course. But also where do you want to be? what type of air do you want to breathe. Who do you want around you? Each town has a completely different feel to it. Bonkers.

  13. Comrade Nom Deplume, living well off the carrion of the left says:

    [7] ragnarian

    Nice try but your inaccurate comment and that short on details article tell you nothing you can’t have in a barstool conversation with the other drunk. It would be as informative and as accurate.

  14. Comrade Nom Deplume, living well off the carrion of the left says:

    Karma’s a b1tch, eh Met fans?

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