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     | Monday, January 15, 2001 - 12:28 pm  Wonderful news from Fair Isaac at http://www.fairisaac.com/servlet/SiteDriver/Content/1776/NextGenScoresBroch.pdf "Among a subprime population -- credit files with prior serious delinquencies or charge-offs-- a lender using the NextGen risk scores in lieu of the classic risk scores could increase the number of approved loans by 6 - 10% while still lowering losses." Finally Fair Isaac ADMITS that they scored AT LEAST 6 - 10% of the "subprime population" too LOW! This is great news for anyone who wants to sue.
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| | Monday, January 15, 2001 - 12:58 pm And from http://www.fairisaac.com/servlet/SiteDriver/Content/1778/NextGen1pgr.qxd.pdf "At a cutoff score of 740, the NextGen scores’ approval rate was 42% compared to 36% with the classic scores—an overall increase of more than 19%. We also see increases of 30% and 48% at cutoffs of 750 and 760, respectively." "If a lender uses scoring to determine eligibility for streamlined processing, reduced documentation loans, the number of qualified applicants would increase dramatically using NextGen scores—with little or no impact on risk." I.e. a dramatic number of QUALIFIED applicants are DECLINED using FICO scores.
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| | Monday, January 15, 2001 - 03:10 pm I can't believe this. If the NextJunk scoring system is supposed to be better through reducing bankruptcy numbers, it must be doing so (as you mentioned) to QUALIFIED applicants previously through attrition. I can only see low scores getting lower, and high scores getting higher, with a shrinking mid-range.
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| | Monday, January 15, 2001 - 11:26 pm check out my postings here--- i'm ready to sue. my mortgage broker is assembling a package of documents that will take unfair issac off the face of the planet once it gets to court. instead of begging the question, let's beg the answer. credit scoring is supposed to predict the inherent risk of a borrower going into default. my credit history is flawless, and i can't get a 70% LTV loan on my primary residence because of my FIUCO score. if isaac is going to default on his mortgage, it might be Fair to assume that he either has money to make the payments and elects no to, or he is unable to. in either case, the factors involved consist of market conditions in a vast number of sectors [isaac's job, regional national economic conditions, etc], marketplace [house goes down in value, isaac went in with little or no money down as FICO now allows] and isaac decides to give the property back to the lender after forclosure and live rent free in the meanwhile, isaac's wife has quadruplets and he can't pay the hospital bills, isaac's home town has a 7.8 on the richter scale, etc. etc. etc. if there did actually exist a computer model able to accurately predict human behavior and markets, why isn't somebody perfecting it, and becoming a trillionaire on wall street??? the reason is that in nearly all aspects of life, emotion rules over logic in practice, as much as it might appear to be otherwise in theory. take communism as a clear example. it works for insects and looks fine on paper-- leave it to 20th century idiocy to try to make it work in a human society and see what has happened in russia and china when the government imposed it. wall street is driven by confidence and fear, and this fact can be more readily observed today, as computer technology allows processs and clearance of transactions to faster and in greater volumes than ever before possible. if a company falls a few cents short of expected earnings, its stock value plunges 50%. world markets respond to the voice of alan greenspan as much if not more than to that of the president. let's thank lucky stars that he handles this power responsibly, at least as far as i can see. i wonder what he might think if he knew what credit scoring is actually doing to real estate and mortgage lending industries-- perhaps he'll find out the hard way when he goes on vacation and can't rent a car because his FICO isn't high enough. here in boston, computer models can't give decent weather forecasts 3 days in advance, and i dare say that meteorology is a much better understood science than are economic predictions and human behavioral patterns. FICO came around and changed the rules of an age-old, time-honored system of business relationships, how they are formed, and how they are maintained. i can show about $60,000 in actual damages as direct consequence, a burden which would have already caused many borrowers to go into foreclosure or bankruptcy-- this computer modeling crap is underwriting its self-fulfilling prophecy of discrimination and deceptive business practise, bringing about precisely what those who authored it claim it is designed specifically to prevent. my real estate debt today is at rates of interest between 8.5% and 11%--- my wife asks me where are the paychecks going, and i show her the bills and statements from the bank. 680 FICO is yes, 679 is no, and for a self-employed borrower that IS absolute, period. .again. equity and cash flow are irrelevant. too much consumer debt? no problem-- that money all went into the property, which an intelligent lender will oblige me to pay as a condition of doing the loan, and i agree. if an error shows up on my credit report, i call the offending party and have them fax a letter to the effect that it was a mistake, which a banker can read, and make an educated decision. no computer can do that today- if it could, whoever developed it would own wall street, not be seated at a dumb terminal trading stocks and bonds. enough for one night. fellow FICOvictims are always welcome to contact me directly, and all posts are welcome, even from those like shylock who may not share the same views. credit scoring is a new breed of animal in the park, and its long-term effects on the world economic ecosystem have yet to be seen on a large scale, much less understood. i can see potential only for serious harm, as it is stepping into a milieu which in itself is far from precise, and changing the way things have always been done. let's see it give an accurate weather forecast for 30 days, not 30 hours--- most mortgages terms run for 30 years-- the thinkers behind this one can't have half the brains of an animal cracker-- it's a bit like an intergalctic space flight program being planned on a grand scale before we have yet to set foot on mars. goodnight--  * (un)fair isaac sucks. period.
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