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     | Thursday, November 23, 2000 - 10:15 pm  i have posted on this board several times about the extent to which i have damaged financially because of FICO scoring. my office has a mortgage specialist in-house, and a brief discussion with him a few days ago made it as apparent to him as to me that this thing has gotten way out of hand, and something should be done about it. with very strong equity positions and years of flawless credit history, i am treated as a substandard borrower by every lender i approach, all because of FICO scoring and nothing else. i want to refinance my primary residence. a first adjustable mortgage at 6.75% is about to jump up considerably, as the 3-year rate lock as about to expire. this, along with junior liens, bring my equity to about 30%. after reviewing my scores and documentation, he told be that i am being unfairly denied credit, in this case based upon FICO alone. as it stands, a 20 year old high school graduate with a $9/hour job, two store credit cards, a major credit card and a phone card in good standing for at least a year could get a better rate than i can, based upon the way the mortgage industry has been forced to comply with FICO-imposed mandates. i have been working with my company for over 7 years, have a spotless credit history, and equity well over and above the house i live in, though much of this is in illiquid asserts. i bought another property last year, renovated it, and was unable to get a competitive rate then either when refinancing, in spite of a bank-appraised value of $740,000 and a lien of only $453,000 against it. that's nearly $300,000 in equity, and about 60% LTV. yes, i did get financing, but at a substantially higher rate and under terms much less favorable than that kid flipping pizzas down the road from my office would on the exact same property under the exact same circumstances, based ENTIRELY upon FICO scoring. our mortgage consultant complains that this is as much a burden on lenders who want to loan money to very well qualified borrowers, and cannot for the same reason. i want to take some form of legal action, but i can't figure out who i should be suing. he agrees that my case is very strong, and i can walk into court and document thousands upon more thousands of dollars in actual damages-- the problem is trying to determine who is responsible for the fact that even lenders who have financed me repeatedly in the past and want to continue on with me can do so no longer. the credit bureaus are not reporting any erroneous information on my reports-- they are just giving me low scores. the computer programs that make lending decisions are written by (UN)fair isaac. friendly neighborhood banker is willing to loan me money at much higher rates-- money i could get at premium rates if not for FICO. sometimes i am advised to refinance at a higher rate, wait for my FICO score to improve, and then refinance again. the big question comes up more the xillionth time-- why should i have to do this when i have perfect credit and more than enough equity to meet every qualification anyone could ask for, except a high enough score based upon some backward coputer model, parameters of which are just becoming known now even to lenders and mortgagors themselves. this computer program has designated my notes unsaleable on secondary markets, regardless of my previous credit history or the LTV i am offering to secure what i borrow. lenders that said yes three years ago now say it is no longer their choice in the matter, and tell me it is due entirely to the fact that a computer didn't spit back a high enough FICO score. they say they would gladly be doing my loans, as their past experiences working with me have always been positive. the authors and enforcers of this dreadful thing have discrimitated against me by labelling me as a substandard borrower, one who should no longer be eligible for credit at normal rates. i want to know who has pasted this burden onto me, and how is it justified. making use of consumer credit to renovate a building when it is offered to me at low rates of interest (sometimes does interest free) does not violate the terms and conditions of any agreement i have made with anyone-- in the past i have refinanced property by the time the promotional rates expire, and pay the creditors back. every dollar i save in interest is a dollar i save for myself or my family. saving money on interest when you make your living in real estate is my idea of business sense, not irresponsible use of credit. cash on hand allows more leverage, and the ability to borrow at prevailing interest rates is crucial to continuing successfully, as any reasonable person can see. that friendly bank one block from the pizza parlor has liens on my property now, at 9.5% and 11.5%. i borrowed from them almost 18 months ago, intending to pay them back within 6 months. today i'm still making that hefty interest payment, because i can't refinance the property collatoralizing the notes, at least at a rate that would cover closing costs and add-ons. care to guess why???? somebody has passed judgement on me, and i should have the right to know who, how, and why. perhaps it is more accurate to say that somebody has delegated the process of mortgage lending off to a computer model, and no-- i'm not going to sue IBM or compaq over this one. the programs i know of are called loan prospector and desktop underwriter. FICO scoring has been around for years-- it is just recently that my problems with it have arisen, as the tool now guides its master instead of the other way around. if the guy down the block flipping pizzas can get into property ownership through this thing, more power to him-- that's great. name, social scurity number, FICO score, and you can borrow a million at the best rates banks can offer, so long as the computer spits back a high enough score. i recently had to write a check to buy a refrigerator for $599 at sears, because when the purchase pushed my card a few dollars over the credit limit, FICO wouldn't let it go. a client in my office was denied a mortgage because the score was 679-- 680 and the loan officer writes a commitment letter right on the spot. call that fair lending and i'll show you a las vegas casino that operates at a loss. the time has come for something to be done about this-- it is a violation of consumer rights, and should not be allowed to continue. frustration and futility have reached their limits here-- i need a place to start, something to grab onto so a course of action can be planned and put into motion. i've heard the big U word one time too many (Unfortunately). a signifigant portion of my income has been going to excessive debt service over the past two years, and FICO is the reason. wouldn't it be nice now if i could find the cause-- Amen-- 
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| | Friday, November 24, 2000 - 06:41 am Doug: I am very sympathetic to your plight and your frustration with Fair Isaac credit scores. Unfortunately much of your frustration is misdirected. You have correctly realized that someone has passed judgement on you and you want to know how, who and why. You need to realize that in some circles the amount of money you have is considered obscene. To these people the money you have made and the value you've created is not a result of your hard work, diligence and determination to educate yourself. To these people you have "won life's lottery" and it's just a matter of luck and unfairness that you have so much while a single, pregnant 17-year-old girl has so little. To their way of thinking your good credit history is a result of your good fortune. You have been fortunate enough to have money and so meeting your obligations is easy. On the other hand others, who have not been so fortunate, have been laid off from their jobs. They have been forced into bankruptcy, into not paying their bills and into being poor. None of this is their fault, you see, it's because of big corporations and their greed for the almighty dollar that they can't take care of the little people and tread them down underfoot. So, in interest of fairness, money must be taken from you and given to them. Your good credit must be taken from you and given to them. They must not be punished for having not paid their bills in a timely fashion because it wasn't their fault -- it was the fault of big, greedy multinational corporations. In case you haven't guessed these people, who have passed judgement on you, are called liberals. These liberals are big into government and have controlled much of it in the past. And during their control they've made some modifications to the laws to make life easy for the shiftless slackers and difficult for those of us who are trying to create value and enjoy it at home in our homes with well-manicured lawns. One of these laws is called the Fair Credit Reporting Act and is designed to make things more "fair" according to the liberal definition of fair. The Fair Credit Reporting Act gives consumers wide lattitude to erase accurate negative information and, in any case, limits negative information to 7 years. Now erasing negative information after 7 years is very beneficial to people who were late on their obligations 8 years ago, but not at all helpful to people who haven't been late in the past 10 or 15 years. The problem is that Fair Isaac has had to turn to secondary indicators of people's credit risk -- things like inquiries, number of revolving accounts, length of time accounts have been open, etc. because legally they are not permitted to know that a person has been seriously delinquent in the past. This is just one of the many things that liberal politicians have done to make things harder on the hard working and easier everyone else.
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| | Friday, November 24, 2000 - 05:12 pm Shylock, You hit the nail right on the head. I often wonder if the democrats should just be called communists. Go Republican, go Bush!!! Mike
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| | Saturday, November 25, 2000 - 04:25 am It is naive to think that the capitalist system protects its own. I used to believe somewhat akin to what you both have posted. I can only urge some sympathy and much assistance to those who have been trashed by blind belief in a system that is totally breaking down. No one cares in the corporate world and no one cares in the "Republican" world. what nonsense. the only one who cares about you is you. having been reorged twice and trashed, I have become much more sympathetic and understanding and willing to help anyone who gets f'd by the system. Hopefully, someday, you will also feel that way before losing everything you had worked for and realizing that you came into life with nothing, you leave with nothing, and that there is much more to life than all its toys and silly beliefs.
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| | Saturday, November 25, 2000 - 10:08 am The capitalist system doesn't "protect" anyone. It's not about protection it's about freedom. Freedom to buy and freedom to sell. Capitalism leaves you free to make good decisions and also free to make bad ones. You are free to succeed or free to fail. It is absurd to think that a politician in Sacramento or Washington, D.C. knows more about my life than I do. Despite this they are constantly telling me that they'll "protect me" by taking away my freedom. It's ridiculous. I need a permit to build on my own property, I can't get a loan from an unlicensed lender and if I get strep throat again (like I do every year) I can't just go buy some amoxicillian instead I have to go to a licensed doctor and pay $80.00 to have him tell me nothing I don't already know and write me a prescription for something I already knew I'd need. All of this is "for my own good" -- or so they tell me. It's also for my own good that I can't opt out of bankruptcy in exchange for a lower interest rate and for my own good that I can't agree to a streamline foreclosure process in exchange for lower interest or looser underwriting requirements.
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| | Saturday, November 25, 2000 - 08:15 pm Doug should sue Fair Isaac. See http://www.bayhouse.com/FICOisFRAUD.html
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| | Sunday, November 26, 2000 - 09:16 am It is absurd to think that Doug should sue Fair Isaac. Let's analyze this in a little more detail. Doug complains that "...the mortgage industry has been forced to comply with FICO-imposed mandates." That isn't really true, but I understand where he's coming from and it seems that he understands the crux of the problem too when he says, "[T]his computer program has designated my notes unsaleable on secondary markets..." FICO scores are used by lenders because they want to sell their notes on the secondary market. The big players on the secondary market have said that only a few ways of underwriting loans are acceptable to them, basically FICO scores and their automated underwriting software. Who are these major players on the secondary market? They are three: Fannie Mae (FNMA), Freddie Mac, (FHLMC) and Ginnie Mae (GNMA). All three of these agencies are either outright branches of the federal government (GNMA) or are quasi-federal agencies that are federal corporations acting under federal mandates and receiving federal lines of credit (FNMA & FHLMC). So again culpability leads directly back to the federal government. As further proof Doug complains about the software program Desktop Underwriter and how it declines him when he is a good credit risk. What is desktop underwriter? "Desktop Underwriter is Fannie Mae's innovative, computer-based, automated underwriting system." Doug also complains about Loan Prospector. And what is loan prospector? Why it's Freddie Mac software that, "provide[s] you Freddie Mac's high performance loan origination technology, delivering a Freddie Mac loan purchase decision within minutes. Loan Prospector Tools make homebuying faster, fairer and more affordable." Now why, you are asking, is it fairer to use Loan Prospector when it doesn't consider a borrower's equity position? Because poor, uneducated black people that deliver pizza for a living don't have good equity positions in rental property. If they included that into the matrix it would deny too many minorities loans and that would be racist, wouldn't it? If Doug wants to sue the makers of the computer software that has passed judgement on him then he should sue Fannie Mae and Freddie Mac.
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| | Sunday, November 26, 2000 - 08:09 pm 1) FICO Credit Scoring is a FRAUD. The proof's in the pudding, i.e. on the scanned credit reports at http://www.bayhouse.com/FICOisFRAUD.html 2) Instead of being predictive, FICO Credit Scoring CAUSES defaults. It's simple math. The much higher interest Doug pays BECAUSE of the FICO fraud could cause him to default. 3) Now why, you are asking, is it fairer to use Loan Prospector when it doesn't consider a borrower's equity position? Because poor, uneducated black people that deliver pizza for a living don't have good equity positions in rental property. Having brokered many mortgages myself, I have to say that this is NOT true. I specialized in working with low income and often minority first-time buyers. NONE of my clients got declined for not having rental property. At the same time, my investor clients also got their loans. That's because FICO Credit Scoring did not exist then. We still used our brains and underwrote loans using common sense. Loan approvals were based on the APPLICANT'S credit, employment, assets and liabilities. It wasn't perfect, and I sure ran into brain dead underwriters occasionally, but then there were still a gazillion OTHER lenders. Today, applicants are declined due to Credit Scores. Poor and uneducated people of ALL colors don't read this forum, they don't know that their entire credit worthiness depends on NOT incurring inquiries and that it's a BAD thing to take advantage of interest free finance company offers for purchases. The poor and uneducated don't know the FCRA, they don't know that they can NOT explain away incorrect credit data after they apply for the mortgage. The poor and uneducated have no idea that Credit Scoring exists. The poor and uneducated are the suckers who pay interest through the nose (until they default) so the wealthy and "educated" can enjoy ZERO percent interest loans. FICO Credit Scoring DOES discriminate. Thanks for bringing that up, it's been a while since I had the opportunity to point that out. 4) I haven't seen Doug's credit, but suspect that a lot of activity is causing the low Scores. Doug doesn't fit in the mold. He's a little different. Can't have that in America! You guys just make sure you conform. Individualism is out. It's too funny that that's what communism is supposed to be like, and apparently NOBODY in the States picks up on that. A nation of lemmings?
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| | Sunday, November 26, 2000 - 11:33 pm thankyou everybody for your inputs-- i would appear that (un)fair isaac and the fed are both reponsible for the problems i am having- the model itself was developed by (un)fair isaac, and the fed has dictated to the secondary markets how that model is to be applied. of course, every time my credit is run to try to obtain new loans, an inquiry is put onto my credit report and it has a cumulatively negative effect upon the FICO scores. lenders can't evaluate me without running my credit, so it's the proverbial catch-22. any intelligent banker can see that if i intend to use the proceeds from a real estate loan to get rid of alot of consumer debt that has built up as i renovated the property, both the interest rates and the monthly payments will drop substantially, thereby further reducing the possibility that i may default. if computers are going to be making these decisions from now on, this factor should be put into the model. non fico-bound lenders often require me to eliminate consumer debt as a condition for the loan, and this is never a problem, as that is one of the main reasons i am refinancing in the first place. when fico prevents me from refinancing, those low promotional rates on my consumer debt expire, and i'm stuck with 17% or higher. depending upon my cash flow, i end up signing over my paychecks to pay the increased interest, and with a debt load well into 7 figures, just think of how much extra money that can entail. if i see any possibility of a cash flow freeze-up, i sometimes find myself refinancing at the higher rate to get cash out of the property before real trouble comes along in the form of not being able to make payments in a timely fashion, as i always do. refinancing when i haven't planned to, knowing that i'm going to be selling the property off or refinancing again once requirements of the loan such as seasoning, prepayment penalties, or strict limitations on how much cash i can take out from the property, can become VERY expensive. appraisal, legal fees, closing costs, mortgage broker, title insurance, ridiculous add-ons for not having the right FICO score, higher interest, knowing all along that when and if my score ever does get to the point where i get a premium rate i'm going to refinance again anyway, sucks many thousands of dollars out of my equity or my wallet each time around- often $10,000 or more when all is said and done. rather than sue those responsible on my own, it would be far more practical for me to enjoin a class action if there is one already in progress, or at least assemble a fair amount of like-minded similarly fico-frauded individuals or companies. there is little doubt in my mind that initiating something as broad-based and grand both in scope and legal implications would cost me much more that this system is draining from me in higher interest payments and refinancings, and i would find myself easily outclassed considering who i am likely to be challenging in a court of law. my name is doug, not bill gates. here comes that big "U" word again-- unfortunatley, my employer, a $5 billion boston based real estate company, is not interested in doing anything about it either, as the amount of business they are losing because of FICO is relatively small, and that pizza guy down the block could probably buy a first home now, when a few years ago he wouldn't have a prayer-- that means doing business, and i'm sure FICO does help some people as much as it has harmed me. if my company were to take an active stance in this matter, i would have resources at my disposal that would make the idiots who came up with this thing take a second look at what's wrong with it, and realize that somebody who has been greatly affected in a very big and neagative was isn't just chewing bubblegum and whistling dixie slightly off-key. it could also form a base for others to join in a class action-- perhaps to even become a movement demanding a return to fair lending practises for one and all, regardless of what they do, what their skin looks like, where they were born or went to school. etc. etc. etc. sorry and sad to say t'aint gonna happen anytime soon, barring a intervention from powers that be on high several rungs up the ladder from where i sit, or a miracle of divine origin. for now, this is the best place i have found so far on the internet to bring this to people's attention, and hopefully somebody out there will pick up on a thread or an idea we can pick up and run with. it's long, long overdue. thanks again, and goodnight--
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| | Monday, November 27, 2000 - 06:51 am I say write, call and harrass your Senators (both), local congressman, assemblyman, the FTC, and anybody who will listen. Believe it or not, with the climate in Washington being of uncertainty and the backlash against politicians who seem to cowtow to special interests being extremely high, I would (and do) this all the time. I am a regular caller to my assemblyman in California as well as both of the Senators. I feel it does work to some effect (if you are persistant and know which buttons to push). Also, call some of these local news shows that deal with consumer issues, with all the fuss over the FICO scoring system right now, I bet somebody is building a story on this. If we all start harrassing our friendly (!) politicians, believe you me, this crap will change. Also, I saw this same thing in a recent Business Week AND Forbes. Don't think the media isn't starting to crawl all over this one. If I am a politician seeking reelection (Bob Hertzberg anyone? Notice how he ushered the FICO disclosure bill through the assembly real quick last year) I would be very scared if the media harps on this as this hits WAY CLOSE to home with the average Joe.
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| | Thursday, November 30, 2000 - 06:11 pm Christine: You were bang on when you said: FICO Credit Scoring DOES discriminate. Thanks for bringing that up, it's been a while since I had the opportunity to point that out. 4) I haven't seen Doug's credit, but suspect that a lot of activity is causing the low Scores. Doug doesn't fit in the mold. He's a little different. Can't have that in America! You guys just make sure you conform. Individualism is out. It's too funny that that's what communism is supposed to be like, and apparently NOBODY in the States picks up on that. Yes, but this Canadian understands UNfair Isaacs scoring system. It DOES discriminate because it assigns points based on people's credit histories LIKE you, how your payment patterns compare to people LIKE you....etc,etc,etc, ad nauseum. This is insidious communism, at the very least socialism, to be lumping predictive characteristics together as an excuse for LAZY DECISION-MAKING on the part of lenders seeking the all-profitable automated solution. Decisions based on credit history should be based on YOUR credit history, not ouija boards and tea leaves, or any variety of factors, for which the parameters were determined by studying for decades GROUP CHARACTERISTICS. Inherently, it stinks.
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| | Thursday, November 30, 2000 - 06:39 pm Yeah, it stinks. If I recall that correctly, a class action requires a couple of people to sue on behalf of the class. If Doug is still with us, and if he (or anyone else) is willing to sue, I'd be happy to look for a lawyer and the "rest of the class." What it takes is people who suffered damages and can prove it.
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| | Friday, December 01, 2000 - 04:29 am From the very first posting although Mr Pratt seems to have a perfect credit history, he does sound rather leveraged. Two recent secondary loans on a mortage and maxed out credit cards. And FICO doesn't tell Sears not to let you go over your limit. Sears tells Sears not to let you go over your limit. Did you call customer service and ask them to raise your limit? Fico doesn't tell the bank not to approve you loan. Fico merely predicts your ability to pay it. The bank chooses whether or not to underwrite the loan based on your score. Your anger seems very misdirected.
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| | Friday, December 01, 2000 - 05:43 am FICO issues a score to the bank rating that consumer. The bank makes the lending decision often based solely on the score. True enough, but if this is not how the scores are supposed to be used then FICO is sure making a bunch of money on this error. If you sell a product that you know is being wrongly used and because of this misuse is harming a large percentage of the US population then you ought to be held accountable. I think the anger is appropriately directed.
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| | Friday, December 01, 2000 - 08:53 am The bank or any company is looking for its base clients. They often do not want to have dealings with every single person in this country, only those that fit their demographics. So when Fair, Isaac states that a person has a 620 score. The bank (or whomever) takes that and decides if that score is within the demographics of the customer base that they wish to develop. Fair, Isaac is not responsible for the bank saying because this is a non-conforming loan and therefore will be harder to resell, we'll need to make more money from you to take it. The bank is making that choice about what products they wish to deal with. Not Fair, Isaac. These scores are not designed to say 600 decline / 601 accept. They are designed to forecast to a business the odds of adverse credit actions based on statistical analysis. How a company chooses to uses that information and where a company chooses to draw their own bad / good line is up to each individual company. Not Fair, Isaac. When a mortgage company says we are drawing the line at a 680 FICO score. They are saying that they only wish to take that percentage of a risk. And if a person's credit report is accurate, then there is a good deal of accuracy to the bank's decision based on the statistical analysis that Fair, Isaac has done. I agree with the fact that credit scoring does discriminate. This is because social-economically disadvantaged people usually do not check their credit reports. and this drives them to higher rate markets perpetuating the cycle. Education and self-discipline is the key to credit redemption as it is with everything else in your life. But to blame Fair, Isaac for a bank rejecting you because of your credit profile doesn't statistically show you to be a good risk is illogical.
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| | Friday, December 01, 2000 - 09:48 am Fair Isaac, the CRAs, and the lendors are all holding hands in the credit scoring mess and all share some blame. The CRAs are to blame for inaccurate reports. The lenders are to blame for using scores that they don't even understand. Fair Isaac is to blame for their relentless efforts to keep any meaningful explanation of their scores a secret while they take in huge profits from the lenders widespread misuse of that score. I know you read the FICOisFRAUD article here. What is your apologists explanation for that?
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| | Friday, December 01, 2000 - 02:58 pm You ask for the “apologist” explanation for variances in a person’s FICO score around the end of one month and the beginning of the next month. Quite simple, really. I direct your attention to a list of adverse reason codes provided by a vehicle lender on the Internet. They also nicely provide us with some of their own statistical experience with specific scored borrowers. I direct your attention to adverse reason codes 15, 16, 31 and 32. All of these reasons for scoring lower have to do with a lack of recent information. If the information on an account shows accurate as of, let’s say, 12/31/1999 and you are checking a person’s credit score on 1/12/2000 then you’ll get one score (let’s say they score 681). But if you are checking the same person’s score on 2/12/2000 and the information hasn’t been updated his score will be lower because of a lack of recent information. How much? Well, perhaps 10-30 points lower. Why? Because of those people without recent information a certain percentage of them (for the sake of an example, let’s say 10%) have become 30 days delinquent on an item. And let’s say that a 30-day delinquency costs you 120 points on your credit score. Under those circumstances a lack of recent account information would cost you 120 points times 10% or 12 points. Now let’s say you check on 3/12/2000 and STILL the person’s information hasn’t been updated. Now we have to figure that 19% of people will have a 30-day delinquency and 1% of people will have a 60-day delinquency. Let’s say 120 points are lost for a 30-day delinquency and 210 points are lost for a 60-day delinquency. So you lose 2 points for the 1% chance that you’re 60 days delinquent and 23 points for the cumulative chance of being 30-days delinquent. So you see it’s very important to know that your accounts are all accurate and up to date. How do you ensure this? Well, there are two ways: the easy way and the hard way. The easy way is to just apply late in the month, like on day 24-26 figuring that by this time most lenders have gotten in their information on your performance in dated either 10/31/2000 or 11/1/2000. The harder (but more accurate way) is to subscribe to a service like http://www.consumerinfo.com/ and check your report regularly. You’ll come to know exactly what times of the month your credit report is completely up-to-date and you’ll score the best.
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| | Saturday, December 02, 2000 - 10:36 pm hi again everybody-- thanks for your continued input. my credit cards are far from maxed out, and the secondary liens on my property have stayed there because FICO doesn't give me the option to refinance the building at an overall rate/terms that make it cost effective. that is changing after the first of the year when the adjustable first mortgage rate lock expires and goes up about 2.5%. i have a loan lined up now through a non-ficobound lender at 8.375 with 1.75 points. that would be 7.25 with 1 point if not for FICO. i have lots of actual damage, and plenty of ways to prove it. i am more than willing to sue if i can get others to join in the class action. thanks christine for the encouragement, and if you can steer me in the right direction legalwise, i'm ready to go.
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| | Sunday, December 03, 2000 - 09:20 am Doug, Just some input on the mortgage you're about to take. The points you'll be paying will increase the effective yield to the LENDER. This is prepaid interest. If you don't plan to keep this mortgage for the entire terms then I wouldn't advise taking the so called discount.
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| | Sunday, December 03, 2000 - 08:58 pm hi again-- these are not points that i am paying for a discounted rate-- they are add-ons due to the fact that i am self-employed, and it is a 4-family property i am refinancing. as for FICO, i'm limited to 70% LTV on this loan. as for FICO, if i could go to 80%, that would be sayonara to all of my credit card debt, and then some. as for FICO, that consumer debt could be at 7.25% and tax deductible if not for FICO. as for FICO, it sucks. time to sue. as for FICO, the lenders are in bed with (un)Fair Isaac, and the fine def folks who brand my 75% or 80% LTV notes unsaleable on the secondary markets SOLEY because of my score. as for consumer debt, most of what i generate has gone into my properties, not up my nose in a snort stick. as for maxed out credit cards, that happened a year or so ago when i had to borrow additional money at the 11th hour to close on a property, as the lender received new FICO dictated guidelines for underwriting. then came the renovation. i put out nearly $300,000 cash in less than 6 months. as discounted rates on the credit cards expired, some of them went from 5-8% to 15-22%. my equity was in the property, and i couldn't refinance it. the original non-ficobound lender finally agreed to do it at 75% LTV, at a premium interest rate. the original note was to be $500,000 at 6.75%-- after i had gotten a verbal approval from one of the mortgage brokers i have worked with in the past, a "we regret" came from his underwriter the next day. FICO scoring was cited as the one and only reason why this happened. 2 weeks to closing, i had the downpayment money set aside, and FICO scoring prevented this lender from closing the loan. the non-ficobound lender required an extra $47,000 cash (which i had to borrow at a high rate of interest), and the final rate on the first mortgage ended up at 7.375% for 3 months, then treasury index plus margin after. this is one of many examples of actual damages i have incurred because of FICO scoring. mortgage brokers i work with and who know me well agree that my positions have only strengthened over the past few years, and the Yes back then that is No today is attributable 100% to FICO scoring and nothing else. measurable damages include higher interest rates, points, add-ons paid to non fico-bound lenders, a need to repeatedly refinance property in which i hold at least 20% equity (usually more)to prevent cash flow lockup, high-interest consumer debt i find myself unable to eliminate once the interest rate promitions have expired, due to inability to access equity in properties where renovation has produced this debt, and where the value has gone up signifigantly by virtue of the renovations, as well steadily increasing property values. lenders are making a fortune, as FICO scoring forces well-qualified borrwers to accept less favorable terms and conditions from sources where the borrower is in a truly compromised position, such as a recent bankruptcy, extensively ongoing history of late/ non-payments, charge-off, vehicle reposession, or LTV at 100% or even higher. my lenders will support me wholeheartedly here-- one has hundreds of pages of documentation of my repeated attempts to finance a new purchase, or refinance an existing loan, where the FICO score has been the one and only reason why my requests for credit were denied. this fact doesn't take at all into account the untold hours of my precious time, aggravation, psychological/emotional stress on me, my wife, and the mortgage professionals i work with on a daily basis who find their efforts going to waste as well. i carried a large duplex empty for most of this year, and had to let it go when my cash flow got tight again. little did i know how much this curse called FICO would affect my capacity to conduct business as usual-- it has changed all the rules, and turned my last project that started off as a sure winner into break-even at best, but probably a loser when all is said & done; any profit i might make is getting slowly digested by the higher interest rates i'm paying, courtesy FICO, and then i have to answer to the tax man on april 15. backward cash flow is just as it reads, and FICO models haven't been told to look at how a borrower's monthly input/outlay can change for the better when a normal 80% LTV loan frees up $150,000 in cash and plugs that consumer debt right between the eyes and gets rid of every last penny of it. just think--- a cocaine dealer with a high school GED, a year on a minimum wage job, a secured visa $1000 card, phone, sears card, and $3500 car loan in good standing can and WOULD get better finance terms buying an $80,000 condo than i can, sitting on a BA from Harvard, nearly 8 years with a very good real estate firm, trying to refinance my own house at 75% LTV, and i drop a dime and a quarter (inflation) on anybody selling illegal drugs out of one of my units. not to boast; just making a point--- how could this be possible??-- alex trebek-- "the answer is: FICO SCORING." intestant #1-- "what is the fastest way for a new york drug dealer to get a mortgage to buy out his stockbroker customer's $2 million central park co-op with no money down when the nasdaq shitts out?" "yes indeed, that puts you into the lead as we head into FINAL jeopardy"--- that's where the mortgage industry is headed too, if somebody who can do something about it decides to sit back on their butt and let computers do it instead--  * just wait until a few million FICO approved loans start going into defunt. the fed'll be eating 'em faster than mCbrgrdeth can flipp 'em out.-- * enough is enough. proof is proof. i've got tons. one of my older sisters makes $22,000 a year, has a handful of credit cards in good standing, pays a $725 monthly rent, and lives one mile from me. my house is worth $625-$650K, and generates $3100 in monthly rent. i apply at 75% LTV, and we find her a similar property. she doesn't have cash for such a downpayment-- with FICO, she could ask for 90% LTV and still get a better rate than i can. the loan i mention at the head of this posting is going only to 70% LTV-- FICO won't let it go any higher. i owe $440K on the property now, so along with the markedly higher interest rate, i may be obliged to bring some cash to the closing table. of course, the lender will offer an equity line of credit up to 85% LTV at 9.5% after closing, so long as the FICO computer doesn't kick my score down too low-- then it's 80% LTV at 11%. question--- a year ago, i had about $1.1 million in outstanding debt. i owned $1.5 million in real estate alone, other assets notwithstanding. the mortgage company i have worked with for years was offering 6.75%, and i wished to consolidate this debt at that rate, collatoralized by the property. why should we have not been able to restructure this debt when both the lender and i were in full agreement relative to terms and conditions, and ready to proceed? the answer is--- FICO scoring. yeah and behold, some jackass will argue that the lender decides what to do with their own money. offer them a rate that's the lowest since LBJ sat in the whitehouse, and then tell them it can't be sold on the secondary market. if i like the rate and make monthly payments on it until 2030, who or whatever owns my paper until then is locked in at 6.75% until the end. FICO has given lenders an excuse to say NO only wished upon stars by banks of yesterlife- the puter doesn't like your score, sorry, time for glue-ons. substandard borrower. it reeks of some pretty cheesy bedfellows too- jack O. Flender, Matt S. Trebasian, and company. more -- *. let's make no mention of who sleeps, preferences, things that go moo in the night, or omnilenduality. somebody is building the pyramid point bottom, course getting wider going up. this is great for those who believe it will stand for centuries and make people oohh and aahh wondering if spaceships came down from the heavens and did it just because they think we're all such a bunch of cool dudes. i don't ascribe to that philosophy or form of design, and my contractors tell me not to renovate my properties that way either. in the real world of common sense, a tall pyramid should start at the bottom, adding sequentially smaller courses until a high pinnacle is reached. FICO is doing it all ack-basswards. king moronos sings to the heavens he got 3 courses finished, while king wiseman to the west only got 3% through the first course of his pyramid in the same length of time. six years into the project, king moronos finishes the sixth course of his inverted pyramind, and on the sixth day after the sixth stone was placed in the seventh course of his pyramid, it all topples to. meanwhile king wiseman to the west progressed exponentially on his pyramid, well into the third course, when moronos had accomplished little more than if he had never even started. you get the idea. i'm so tired of this i just want to go to bed and not dream of it-- good nite--- there must be mention of FICO scores in curses of some mummy's ancient tomb-- their village died of famine and plague because of too many outstanding grain and sheep debit accounts. BAAAaaaaahhhhhh!!
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| | Wednesday, December 06, 2000 - 05:48 pm Well, the Book of Revelations mentioned that those without the number "666" would not be able to buy or sell in the end-times....... You draw your own conclusions!
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| | Wednesday, December 06, 2000 - 07:06 pm right now the magic number is 680. after i file suit against these idiots, 14 points may drop off the score required to get a decent interest rate. i would rather not go this one alone- if there is a class action suit already underway, the kind of evidence i can bring to court will make them beg to settle. my case against (un)fair isaac is rock solid, though i am in no position to take on the fed, no matter how right i may be-- it seems the two are still on their honeymoon, though if this observation is incorrect, enlightenment to higher realms of reality is always welcome.
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