Almost 26% of consumers have FICO scores below 600, an increase from the past two years and a reading that indicates it could be next to impossible for these borrowers to get a new mortgage.
According to new figures compiled by Fair Isaac & Co., from 2008 to 2010, the biggest deterioration in credit grades came in two categories: 550 to 599, and 500 to 549.
On the high end of the FICO range, nearly 19% of consumers had scores between 800 to 850 in April 2008. That figure dropped to less than 18% by April 2010.
On the lower end of the FICO score range (300 to 599, encompassing three categories) 25.5% of consumers were considered risky as of April, compared to readings of 25.2% in April 2009, and 24.1% in 2008.
"While these are small movements, they are important because even slight movements can impact loan portfolios," said Andy Jennings, FICO's chief research officer and head of FICO Labs, the company's research arm. "More interestingly, the performance of consumers at a given score has changed as the economy slumped. It's critical that lenders have analytic tools in place to understand how a score of, say, 700 will perform. Will it perform as a 700 performed last year? Will it be riskier? Banks must be able to anticipate how macro-economic factors such as GDP, unemployment, and housing prices will affect consumer credit risk."
Daily Briefing | Tuesday, September 7, 2010
-
South Florida Foreclosures Near $65 Billion
Borrowers have defaulted to the tune of nearly $65 billion in financing in the tri-county South Florida region since the real estate crash began in 2007, according to a new report from CondoVultures.com.
-
Investment Fund Buys FDIC NPLs
A unit of Mariner Holdings LLC, Leawood, Kan., has purchased part of a $760 million portfolio of property loans from the Federal Deposit Insurance Corp.
-
FHA Refi Program for Underwater Loans Unveiled
The Federal Housing Administration Tuesday morning officially launched a new refinancing program to aid underwater borrowers, allowing lenders to write a new government-backed mortgage where up to 10% of the original loan amount will be forgiven.
-
California the 'Golden State' for Home Lending During the Decade
Mortgage lenders originated $1.04 trillion of 'purchase money' loans in Southern California during the past decade, according to a new research report.
-
Residential Servicing Balances Continue to Fall
Mortgagors continued to pay down their residential loans in the second quarter, a trend that reduces their debt load but also spells potential trouble for mortgage banking firms that earn processing fees on such balances.
-
Roughly 55% of Bank Donations to go to GOP
Though Democrats scored a big political victory in passing regulatory reform, many are already paying for it as the financial services industry directs more of its contributions toward Republicans and moderates who tried to pare back the revamp.
-
New Tool Speeds Up Delivery
Warren, Michigan-based provider of commercial and residential mortgage default management solutions Five Brothers has introduced a new tool that helps speed up and simplify the preparation, delivery, notarization and tracking of all mortgage documents.
-
Warren for CFPB Chief Speculation Continues to Mount
The speculation over whether Harvard professor Elizabeth Warren will be nominated as director of the Consumer Financial Protection Bureau refuses to die.
