VantageScore has managed to sell Fitch Ratings on the idea that they should use their FICO score replacement as a means to rate mortgage securities. In general I like the idea. Instead of vague “prime” or “Alt-A” terms, or using FICO scores that vary depending on the agency delivering them, there is a consistent measure that can flow up to the aggregating securities for ratings, to define tranches, etc.
Like it or not, securitizing mortgages continues to be essential to mortgage financing, a rather significant component of the economy. Pariahs though the ratings companies and terms like “CDO” look today, and as much as I hate introducing simple “scores” to complex credit and risk analysis, something practical has to be done. And, like I always say, better a credit score derivative blended by two ratings agencies, than just one.
Fitch Becomes First Rating Agency to Accept Mortgage Loans Based on VantageScore [BusinessWire]
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Let's Have A Serious Discussion (About Tiger's Texts)
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Does Charlie Gasparino Owe David Einhorn (And Barry Ritholtz) An Apology?
First! No bitchassness…
-Diddy
Long overdue.
Fitch is sitting on a gold mine of data. With the rating techonology long available, it is surprising that it took them so long to do it.
Too long, didn’t read.
Too boring, didn’t read
Americans are way too drunk on securitization. In my Third World country, when I applied for a mortgage the bank demanded I post collateral equal to the value of the house – in CDs. It’s just nuts isn’t it?
I bet the sham-wow is faster! Yeah!
We gotta make the best of it. Improvise, adapt to the environment, Darwin, shit happens, I Ching, whatever man… we gotta roll with it.
One thing that the market has also learned is that even those with perfect credit histories are not immune to defaulting upon loss of a job or for purely economic reasons when there is sufficient negative equity.
Not sure what this new method brings to the table which addresses either of these issues.
Do these idiots realize the Fico concentrations are in the initial deals?
one problem: fitch is the rodney dangerfield of the rating agencies. we’ve always told issuers that they could sell bonds if they were rated by a) S&P, b) moody’s or c) fitch AND either a or b. but guess what? fitch alone doesn’t cut it (unless you want to pay a significant premium). blame the investors and their internal guidelines…
@5 – sounds like you own a co-op in manhattan. despite the banks and their missing credit standards, co-op boards often require LIQUID assets equal to the purchase price of the apartment. sounded draconian a couple of years ago, but it looks like it’s protecting the owners right about now.
youtube Charlie Gasparino harrasses lehman executives. Check that out. Someone is in trouble.
youtube Charlie Gasparino harrasses lehman executives. Check that out. Someone is in trouble.
youtube Charlie Gasparino harrasses lehman executives. Check that out. Someone is in trouble.
EP how about a new/another opinion pole. Will ML shareholders vote down the merger with BAC?
So, uh, I guess we’re going to conveniently avoid the many issues with FICO scores, themselves here, huh?
No problem, full speed ahead! Take a highly imperfect metric and apply it to an already highly imperfect practise, and voila, perfection, right?
14 “pole” – you’ve been spending too much time at Scores. Or maybe not enough (“I got into bed horny and alone, so I reached into my shorts and started touching my pole”)
@11-13: despite multiple posts, the voicemails are entertaining. however, that’s how reports always act. it’s just good that someone had a pair big enough to put it on the net for all to hear. next time, just provide a link.
http://www.youtube.com/watch?v=vyV67c1u25w
@14: way to change the topic. very good question indeed. right now, kenny boy is looking pretty clever and his cross town rival looks like he was left at the alter. so much for the charchar mafia “ruling the world”.
Good post.This is the type of post beyond Carney’s abilities.
#7 – Nice quote. “Collateral” is a solid movie.
#7 – Nice quote. “Collateral” is a solid movie.
Sorry for the double post @19 and 20
#14 is really me. ML shareholders sucking BAC off.
I found video footage of how the deal went down between GS and Hank over on Redtube forward slash 1
SPODE
@ 5 third world countries are drunk of corruption.
a little rule of law and you could have a vibrant market, too.
#8, one would think that bank bankruptcy lawyering would be a lucrative job opportunity taking on those who stop paying but can….
#23 This has nothing to do with corruption. I wasn’t complaining about the high lending standards in my country. We learnt our lessons in 1997. In fact I’m bloody glad our banks don’t lend money to people who obviously can’t pay them back.