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     | Monday, March 26, 2001 - 02:22 pm  today i had a client who until recently worked for one of the nation's major bond rating firms as a secondary mortgage market bond analyst. the job entails assembling groups of loans secured by borrowers' interests in real estate, grading them according to risk, and pricing them accordingly. (UN) fair isaac's magic quaxkware is as secret to them as it is to everyone in this industry. asked to assess viability of a portfolio of loans again have only computer generated numerical scores to go on, no longer the experience and professional judgements of bankers and underwriters-- as such, it is very difficult to grade bonds; the analysts have no idea how the modeling software works, why it has generated the scores it has for particular borrowers or groups of borrowers, and what those scores ultimately mean. classifying and grading a multi-billion dollar bond package knowing no more than do bankers who want to underwrite my loans, and can't, becomes all but impossible when left to computer programs nobody knows anything about. consequently, i am closed out of obtaining decent rates and terms for my mortgages, and high school grads with 2 years on a $9/hour job and a couple credit cards with low balances get better offers than do i. 5% down, and FICO grants them $500,000 or more in credit. making its way to a secondary market securites analyst, the only thing they can use to categorize and place such loans is looking at the score. just as no one tells me what to do to improve my scores, a main complaint the person i spoke with today was not knowing how these FICO scores are formulated, and how to evaluate and place them properly. many are no-brainers, as the mortgage consultant in my office tells me day by day. the problem is, computers don't have brains or intuition-- all they can do is manipulate data they are given in ways they are told to do it. conventional risk designations formerly given by economists and analysts throughout the lending and credit industries are now being substituted by secret-software scores, generated by computer. this trend now controls consumer loan products to the point of virtual exclusivity, and is rapidly acceeding to predominance within the corporate and even banking industries themselves. if this continues unchallenged, the infrastructure of the country's economy will soon be run entirely by machine. the rate of default on secondary market mortgages is escalating at an astounding rate, and FICO was cited as a major, if not most important causative factor-- and that was as the economy was growing. think of what it will be when loans written last year and this year start hitting the foreclosure breadline. a 641 middle score might mean perfect credit, $1M in property with $70,000 in consumer debt, and it might mean the grocery boy missed a couple payments on his visa card-- who's to say? the investors aren't told what these scores mean, and neither are the financial experts who attempt to put them into some form of meaningful order to construct a sensible bond portfolio where return is commencurate with factual inherent risk. the federal government has been sold on FICO, so now the whole industry is obliged to follow suit. to quote carl sagan, "many billions and billions" of dollars are at stake;investor positions are being compromised, and sooner or later somebody's going to wake up and wonder what happened why. for the sake of the nation, let's hope it's alot sooner. it won't be long before later becomes too late-- and yes, FICO still sucks. always has, always will--  **
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| | Tuesday, March 27, 2001 - 03:08 am Meanwhile, doug, the boyz in Basel will have already cashed out their risky positions in their portfolios and enjoy THEIR golf game...meanwhile the underpinnings of the industry fall flat, pillars crumble and taxpayers pickup the tab a la savings and loan crisis and Asian flu.
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| | Tuesday, March 27, 2001 - 04:59 am This post is in compliance with the Fair Use clause of U.S. Copyright Law. Any recording, retransmission or other use for commercial gain is strictly prohibited. Do you Yahoo?! U.S. mortgage securities mostly weaker with U.S. Treasuries By Aleksandrs Rozens NEW YORK, March 26 (Reuters) - U.S. mortgage-backed securities prices were mostly weaker early Monday with U.S. Treasuries as market participants closely eyed U.S. stocks for signs of weakness that could bolster demand for U.S. Treasuries. Discount 30-year mortgage securities were 8/32 to 9/32 weaker, while premium 30-year mortgage securities were 2/32 weaker to 1/32 firmer. A mortgage-backed bond salesman with a dealer firm said participants were closely watching equity price moves, which are having their usual inverse relationship with U.S. government bonds. The strength in equities, he said, was eroding investor demand for U.S. Treasuries. Stock prices were firmer early Monday, following strength in overseas markets and on hopes that equity prices would rebound. The Dow Jones Industrial Average was up 149 points at 9,652, while the Nasdaq was up 24 points at 1,953. Gains in U.S. government bond prices were largely due to weak stock prices in recent weeks. The heightened demand for U.S. Treasuries pushed U.S. yields lower to fire up worries about prepayments (emphasis added) in the mortgage-backed securities market. The mortgage bond salesman added, though, ``we still have rate rallies to deal with'' in the future. This morning, said the salesman, there was little in the way of lender sales in spite of the weaker tone to U.S. Treasuries. He estimated lender sales were at $150 million to $200 million -- off from the usual $250 million to $300 million he sees. In addition to the light lender sales, there was only a $400 million list of bonds backed by credit card receivables to preoccupy investors this session. ``People are cleaning up balance sheets. There may be some profit-taking (emphasis added)'' ahead of quarter-end, the mortgage bond salesman said. Last week, investors reported seeing a flurry of collateralized mortgage obligation (CMO) sales as investors locked in profits (emphasis added) ahead of quarter-end. Meanwhile, the head of a pass-through desk with a dealer firm said there has been better buying this morning in current coupon and discount securities. ``It seems MBS (mortgage-backed securities) are doing better. Volatility is off (emphasis added),'' the salesman said. Five-year Treasury notes fell 6/32 to 104-31/32 to yield 4.54 percent. Ten-year Treasury notes slipped 10/32 to 101-4/32 to yield 4.86 percent. Among 30-year 6-1/2 percent MBS, Ginnie Mae securities were off 4/32 to 100 5/32 to offer a bond equivalent yield of 6.513 percent. Freddie Mac MBS slipped 5/32 to 99-25/32 to offer a bond equivalent yield of 6.579 percent, and Fannie Mae MBS shed 6/32 to 99-22/32 to offer a bond equivalent yield of 6.563 percent.
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| | Tuesday, March 27, 2001 - 12:32 pm the fed is quietly absorbing costs of the excess defaults. the shit has not yet hit the fan. when it does, it will make the S&L bailout look like a yard sale-- *. rather than admit their mistake and correct it, they'll wait until it reaches crisis proportions before doing anything about it.
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| | Tuesday, March 27, 2001 - 05:11 pm What evidence do you have to support your position?
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| | Tuesday, March 27, 2001 - 08:08 pm sadly, shylock, not enough to make a court case. 15+ years experience in the real estate industry, and more than enough highly credible witnesses to testify on my behalf. a real estate portolio well over $1 M in value, even higher before being forced by constraints of cash flow to sell one property off; that imposed by FICO. letters/affidavits from several lenders stating that FICO scoring forms the ONE AND ONLY basis for categorical denial of all requests for credit i have made over the past two years; proof beyond reasonable doubt that actual cash damages now exceed $100,000.00.; inability to attain any additional credit of any kind due DIRECTLY to the FICO credit scoring systems [e.g. refrigerator at sears, home depot supply order going $960 over a prescribed credit card limit]; classification by industry standards as B/C credit risk regardless of impeccable credit history; discrimination due to self-employment; arbitrary disregard of equity positions; summary disqualification by computer for consideration of participation in all premium industry portfolio products due to credit scoring models; need i go on, shylock? i will have to convince you before i can convince a jury in federal court. if you have read my past posts, you will get an idea of who i am, where i stand, and how i have gotten to where i am today. here's a free skeleton out of the closet, one you can use against me any time you wish. no; i'm not gay- i have severe obsessive-compulsive disorder, temporal lobe epilepsy, panic attacks, and other neurological dysfunctions related to vision and memory. not looking for sympathy--- pass that on to those who truly need it. the advent of modern medicine has given me a life to live, not just to tolerate and survive. i made $9200 in 1991, broke the mystical $10K barrier in 1993 with $17,000-- $185,000 in 1998-- gave myself a rolex watch for christmas that year-- i'm going backward now only because of FICO. i play by the rules-- little did i know somebody's idiot computerware would change everything as i began my next major project early in 1999.--- * the evidence i have to support my position is the human kind of evidence, not something some secret software spits out of a computer. which is more credible?,.. that i have yet to see in a court of law, but would far rather see demonstrated in the courtyard of human dignity and respect. the grace of God, coupled with diligent effort, has brought me to where i am today. as much as i would fight to maintain my rights, an amicable meeting of the minds offers a far easier and more cost effective solution to our problems rather than going to war over them. i dare say, if enough human resources were expended in efforts to solve problems people fight about or use as excuses to hate each other, the answer would be begging its own question--  * philosophy aside, look at my credit profile. some lenders suggest ways i can improve it along with the "we regret" form letter. my question to them is what should i do to make my credit better when there is already nothing wrong with it???-- they can't answer, because they don't know why perfect borrower performance generates a substandard FICO credit score. neither do I. i bought the building in june, 1999 for $606,606. over the next 6 months, all of my paychecks, plus $70,000 in low interest consumer debt went into renovating the property. it appraised at $740,000 in december, and the mortgage balance outstanding was $453,000. when i tried to refinance, nobody i know could procure a loan, and i work as a rental agent today and know the industry very well. why? do i ask-- it's your FICO! ••••-O!!-- dummbott buttscrewee computer score. i hope you get my point by now. computer modeling makes loan decisions quick and easy, just like the sadistic dentist who drilled my teeth yelling SHUTTUP DOGGIE!! when i cry out in pain!-- up yours, UNfair isaac--- YOU SUCK!!--- *
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