[hannah]

Originally Posted by Pale Rider

I think we are all in agreement on most of this. The mortgage companies screwed up, and blaming a few people manipulating their score is laughable. I read some reports where lenders were getting people to sign blank papers, and then filling in numbers so there was no chance the loan would be turned down.

And those people admitted to being so grateful to get that mortgage that they questioned nothing about the process at all. Those are the kind of people that should not ever have a mortgage. It's absolutely laughable what some of these mortgage companies did to questionably decent but naive people. But it is not something I as a tax payer should pay for nor is it attributable to purchased AU trade lines. It was an scam of those questionable mortgage companies to begin with.

[centex]

In addition to all of the liar loans, you had people all over the boards that were getting AU accounts and seeing almost instantaneous increases of 30-50 points which then put them in a position to get their precious mortgage...they had already demonstrated that they had no fiscal sense and shouldn't have been in a position to be approved, but because they had artificially inflated their scores, they now 'qualified' for the liar loans.

The culmination of events has resulted in the loss of a number of mortgage products that had legitimate uses until they reached a point of abuse.

There are obviously still people writing jumbo paper, but it is a more complex process. It actually took about ten days to get a contract pending sign on a neighboring property that appears to have sold for $850K (slightly less than asking but still far more than taxable appraised).

There is NO LEGITIMATE REASON for anyone other than a spouse or child to need AU access and I will continue to hold strongly to the opinion that anyone else using them (much less charging for or paying for them) is perverting the intent of the ECOA. I can only hope that legislation eventually gets passed that bans the sale of AU access...

[Pale Rider]

That was always the sad thing about these boards. Lots of good info, but all the tricks were abused to the point that they no longer exist. It amazes me that some people still write "B" instead of writing out the word bumpage because they think the CRA's might figure out what they are talking about.

[hannah]

The problem is and was that simply getting a FICA score high enough for a mortgage doesn't assure that a mortgage is within their reach regardless of whether they purchased a trade line or not. I am sure that the majority of mortgagees that had sub-prime loans did not purchase trade lines to increase their chances of getting a mortgage. And even if they did, their income should have told the tale. One's ability to repay a loan of any kind should be based on numerous factors including FICO and income. I can't say for sure but it seems to me that all factors were not taken into consideration with the majority of the defaulted loans attributable to this sub-prime mortgage mess.

[centex]

Originally Posted by Pale Rider

That was always the sad thing about these boards. Lots of good info, but all the tricks were abused to the point that they no longer exist. It amazes me that some people still write "B" instead of writing out the word bumpage because they think the CRA's might figure out what they are talking about.

I have no problems agreeing with you there.

What fueled the AU issue, in my opinion, was the fact that you had far too many lenders that would put someone in a house provided they had a certain magical FICO number. Never mind that the person was a credit moron and was a poster child for f*cked credit, just get that number...and all of a sudden the AU element was introduced into the picture and you had people who had a credit history older than the person themselves in some instances. You had people seeing magical increases that 'qualified' them for the liar loan.

As such, while the AU scams (and that is what I view them as in the majority of the instances described on the various boards) may not be the sole reason for the meltdown, the impact of score manipulation cannot be discounted in examining the causes and contributing factors.

The Legislature absolutely MUST go back and revisit the ECOA. Lenders should also revisit who they intend for an AU to be permitted. At the same time, there is absolutely no reason why Fair Issac should not be able to create a revision that would weight the level of AU relationship...there is no reason scoring could not be structured in a manner to give more weight to the spouse than to the child in school. No scoring weight should be given to the person who gets a card from the third-cousin twice-removed who once dated Uncle Bob's brother's mother's surrogate child. Such a scenario would greatly reduce the number of opportunities for companies to sell AU's and would bring the use back in line with what has to be the original intent of the ECOA.

[Pale Rider]

Originally Posted by centex

The Legislature absolutely MUST go back and revisit the ECOA. Lenders should also revisit who they intend for an AU to be permitted. At the same time, there is absolutely no reason why Fair Issac should not be able to create a revision that would weight the level of AU relationship...

Part of that issue comes from TILA. They need to revise all sections of the CCPA so that they don't conflict, and don't descriminate. I'm sure they will drag their feet getting to that point.

FI never needed to be involved, IMO. The easy answer was "voluntary reporting". The lenders and creditors do not have to report non-spousal AU's. Verify the account is spousal, report as required in ECOA anyway, and the spouse gets the credit history and score.

If spouse cannot be verified, AU is not reported. They can still designate it an AU to avoid issues with TILA (unless amended above), but they are not required to report at that point. FICO stays the same, and everyone lives happily ever after. Well, maybe.

[apexcrsrvc]

Originally Posted by centex

The reality is that there were abuses of the authorized user process. I doubt that anyone involved in drafting the ECOA ever contemplated that AU protections and benefits could ever be conferred to someone by the sister of Aunt Sally's next-door neighbor's third-cousin twice-removed in the same manner as a spouse would be able to obtain the benefit from being an AU on their husband or wife's account.

As a result of the perversion of the process, too many people were able to artificially inflate their scores and get into houses that they subsequently defaulted on. And while the AU process was not the only contributing cause to the mortgage meltdowns, they played enough of a role that SOMEONE has to get a handle on the scams that run/ran rampant.

Okay, how is it a scam?

We're talking about a computer model here. It's owned by a private company that gets rich off of an amorphous set of arbitrary guidelines.

It is easy to alter scores on both sides of the fence. Debt purchasers do it. Debt collectors do it.

All we're doing is playing under the formula set down by Fair Isaac it self.

Using the term scam implies it's illegal and it isn't. I resent that for whatever that's worth.

[apexcrsrvc]

Originally Posted by centex

In addition to all of the liar loans, you had people all over the boards that were getting AU accounts and seeing almost instantaneous increases of 30-50 points which then put them in a position to get their precious mortgage...they had already demonstrated that they had no fiscal sense and shouldn't have been in a position to be approved, but because they had artificially inflated their scores, they now 'qualified' for the liar loans.

The culmination of events has resulted in the loss of a number of mortgage products that had legitimate uses until they reached a point of abuse.

There are obviously still people writing jumbo paper, but it is a more complex process. It actually took about ten days to get a contract pending sign on a neighboring property that appears to have sold for $850K (slightly less than asking but still far more than taxable appraised).

There is NO LEGITIMATE REASON for anyone other than a spouse or child to need AU access and I will continue to hold strongly to the opinion that anyone else using them (much less charging for or paying for them) is perverting the intent of the ECOA. I can only hope that legislation eventually gets passed that bans the sale of AU access...

Oh, I see your logic now. It's okay for Mommy and Daddy to "artificially" inflate their childs score but, it isn't okay for a person to pay for exactly the same thing. Both means reach the same end. Moreover, it isn't an "artificial" inflation because Fair Isaac made the rules and now their in a bind insofar as the ECOA says that the accounts much be scored.

In any event, the impetus of the ECOA has nothing to do with authorized user accounts. However, FICO 08' is in violation of it and thus, would be a perversion of it's legislative intent.

I still have a hard time getting my head around people that purport to be consumer advocates but, then have such issues with this practice. If it helps the consumer, I am for it. It's one's perogative to view it as unethical but, I suppose everything under the credit repair umbrella can be percieved as such.

Bottom line is that the process is legal and to actually think that AU accounts had anything to do with the mortgage crisis is frankly absurd. That argument is so transparent it does not merit serious attention.

[hannah]

I am in agreement with you Apex. If a JDB can artificially lower my FICO with a bogus tradeline, then I can artificially increase it with a purchased tradeline. Tit for tat.

[centex]

The notion that someone could believe that artificial inflation of scores played no role is patently absurd. Many people were put into houses where their own scores did not justify their even having been considered for the no-doc liar loans. However, once they bought a score, they were then 'qualified.'

As to the issue of kids getting placed on accounts, you will note that I do not believe they should get full weight. I'm actually of an opinion that a kid should have no score benefit from an AU account, but I can only imagine the ration of shit I would have to fade for that. The AU process was never designed for the purposes of score inflation. Obviously Fair Isaac dropped the ball on that one. Rather, the legislation was intended to address the history of a class that historically had no history of their own because they often had no access to credit by virtue of their role as a SAHM. Many people have no idea that their kid benefits scorewise- they make the kid an AU so they have a card for emergencies.

I'm not sure where you got the idea that I have ever claimed to be a 'consumer advocate.' The reality is that I wound up dealing with credit crap after having been a victim of identity theft with losses approaching $200K. I was appalled when I found the boards and saw people routinely claiming 'not mine' despite the fact that they knew damned well they had opened the account in question. It was precisely because of crap like those dispute tactics that made my road (and that of other legitimate victims) much more difficult. Further, despite those losses and despite some of the accounts going to third-paries, I really have not seen the problems with third-parties that some described. The longest that I can recall dealing with one start-to-finish was roughly three weeks. Most of them did precisely what they were supposed to do after receiving a dispute. How do I rail against someone that complies with the law??? Answer: I don't.

You'll find that my two biggest rants outside of the AU nonsense are in the areas of frivilous litigation and the 'debt reduction' companies that rope people in through the television ads. The issues with litigation should be obvious...dockets clogged with crap benefit nobody. I have seen the debt reduction companies absolutely screw people's reports in instances where they were otherwise in good shape and making ontime payments- I had to help extricate a good friend out of one of those after she came to me with two suits pending in the local courts. The money that people waste in those programs is obscene...

[hannah]

I think you are off base blaming the sub-prime mortgage mess on purchasing AU tradelines and/or lumping all credit repair companies together. Don't know what you've had in your coffee the past few days but get real. Loan incentives and the long-term trend of homes increasing in value encouraged borrowers to assume sub prime mortgage fully believing they would be able to refinance at more favorable terms later. Some borrowers were actually told that when they signed their mortgage papers but in 2006-2007 those people found that could not refinance as ARM interest rates reset higher not lower like everyone in the mortgage lenders biz believed would happen. For years houses sharply increased in value and consumers have borrowed at a subprime rate believing that the price of their homes would rise and they could refinance for lower payments. Money for mortgages was "loose" regardless of income. Money is not lent solely on FICO alone and you know that. If I have an 800 FICO and no job, should I be lent any money for any purpose? Many of those who have lost their homes in the sub prime mess did so because they could not afford to pay the actual payment plus interest on their mortgage which is what they should have been paying all along. They took a gamble that they could buy now and pay a year or so of nothing but interest then refinance at more favorable terms later and as with most gambling, they lost.

Were some of the sub primes mortgages based on purchased AU tradelines? Sure, no doubt, but they didn't cause this mess and probably didn't constitute more than 1% or 2% of the foreclosures, if that.

Here where I live, it was a rare thing to see a foreclosure in the paper in all the time I have lived here. Last month there were 44. I bet I could call each one of those mortgagees and I bet not one had a purchased tradeline.

Who put what in your Cheerios this morning?

[spinn]

AU score inflation did play a role in the subprime "crisis". I am sure at least ten people got loans that they would not qualify for based on this. As for it being a crisis, its just fear mongering from the media in an attempt to make the current administration look as bad as possible. Normally 99% of people pay their mortgage on time, now it may of crashed all the way down to 97%.

Another aspect is everyone wants a reason for the market going down. The money managers want the sheople to think that once this is over, the market will go back up and they can continue their march off of the edge of a cliff.

Ninety percent of the credit industry is biased towards banks, CRAs, JDBs and anyone else who lends money. AUs and "not mine" disputes are a drop in the bucket.

[hannah]

Originally Posted by spinn

AU score inflation did play a role in the subprime "crisis". I am sure at least ten people got loans that they would not qualify for based on this. As for it being a crisis, its just fear mongering from the media in an attempt to make the current administration look as bad as possible. Normally 99% of people pay their mortgage on time, now it may of crashed all the way down to 97%.

Another aspect is everyone wants a reason for the market going down. The money managers want the sheople to think that once this is over, the market will go back up and they can continue their march off of the edge of a cliff.

Ninety percent of the credit industry is biased towards banks, CRAs, JDBs and anyone else who lends money. AUs and "not mine" disputes are a drop in the bucket.

Sure. Fear mongering from that liberal media caused all those mortgagees not to pay their mortgages...I suppose that's what happened to the S&L's back in 80's and 90's too.

To check out consumer spending and what is really going on, go the the website of the federal reserve. They do a monthly report. You can check out all the details from now through several years back if you're actually interested in the truth.

[cracrap]

Originally Posted by spinn

Another aspect is everyone wants a reason for the market going down. The money managers want the sheople to think that once this is over, the market will go back up and they can continue their march off of the edge of a cliff.

this is the underlying theme to the stock market and the greater fool theory....
..the fact of the matter is, the stock market is legalized gambling and u hope to sell at a higher price than when u buy or vice versa.....
people that have money want a place to put their money, and if they are not comfortable with real estate, then it will be stocks, if not stocks, then commodities...and so on

[hannah]

Originally Posted by cracrap

the greater fool theory...

I like that...