I hate to admit it but I've been in the mortgage business for a LONG TIME!  About 20 years long. (Yea I started when I was 5 , LOL)...  Today I read that Fair Issac AKA FICO is changing the way it calculates credit scores.  First of all this "Fair Issac" does not always appear to be fair, and secondarily he's got alot of power.  The power to turn people into homeowners or NOT, the power to decide how high or low of an interest rate will be charged, the power to decide how much money someone has to put down on a purchase or how much money they get out of the home they already purchased.  I for one, think that we need to have balance back, we need to be able to add human reason to our loan decisions, take back some of that power that Mr. Fair Issac ever so slowly gained.

I also really find it odd that the reason that the FICO score was first introduced and implemented was to be a tool for lenders to qualify buyers.  This score was based on a mathematical model that predicts the liklihood of a mortgage default in the future. At the beginning everyone was a little slow in getting on board with the change.  The credit score was used on a few loans, then a few  more loans and now is used on just about every type of loan with the exception of government loans.  But really, what good did this credit score model do? It really didn't reduce the amount of pending foreclosures, which last time I read was predicted to be 1.1 million over the next few years. It also took away the ability to look at a loan from a human, logical standpoint and make a decision based on the complete credit profile of the borrower.  I really miss getting the letter of explanations from borrowers as to the reason for the credit woe's.  First of all they could be entertaining! No seriously, people could get loans if they hit a rough patch due to circustances beyond their control while otherwise demonstrating an abiltiy to manage thier finances. They were not just assinged numbers and if their number was one point lower than it should be,opps so sorry.. can't do your loan.

I think now is the time for the pendulum to rest in the middle. Don't go back to the "day" when perhaps there was a bit to much personal bias in making loans, (I was an underwriter at that time, and know this to be true)  however let's not give Fair Issac all the power either.  

Just some thoughts!

                                                         Lorraine - The Loan Lady