Credit Scoring Is Changing Due to Strategic Defaults. Your Super Prime Score Might be Dropping

By
Real Estate Agent with Atlanta Communities Real Estate Brokerage GREC #208281

As credit scoring companies get more and more experience with prime borrowers defaultingon their mortgages, they are starting to see things that might tip them off to a potential strategic default.  They are using these new indicators in their credit scoring algorithms.

Not only are borrowers who previously were rated outstanding credit risks far more likely to default today, she said, but many homeowners are defying long-standing credit industry assumptions by going delinquent on their first mortgage payments while continuing to pay their credit card balances and second mortgages on time. Strategic defaults, or walkaways, by high-score borrowers also have been an unexpected development, she said.

To adjust its statistical models to these new realities, VantageScore says it conducted intensive research on 45 million active credit files obtained from the databases of its joint venture partners,

They are rolling out these changes in January.  So it might be worth it to check you credit scores then.  It might not be as good as you think it is due to no fault of your own.  It really stinks, doesn't it. You might have a perfect credit record but due to some others who have decided to do a strategic default, you get lumped in with them and now all of a sudden you become a bigger risk.

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About the Author:  Tim Maitski has been a full time Realtor since 1999. He has sold several hundreds of homes in areas around metro Atlanta.  Tim started with RE/MAX Greater Atlanta and is now with Atlanta Communities Real Estate Brokerage.

 

Along with blogging on ActiveRain, he provides one of the best real estate websites in Atlanta at www.HomeAtlanta.com .

 

His proprietary  "Maitski Line Reports" chart out the absorption rates over the past 14 years in 37 different market areas.  Know when it's a good time to buy or a good time to sell.    

 

His online Property Tax Calculator allows you to compare property taxes in many counties and cities around the Atlanta area.  He provides the Atlanta MLS Power Search Tool that allows searches of homes using over 35 specific criteria.

 

Over the years, Tim has optimized his business so that he now can offer a huge 50% commission rebate to his buyers.  The more experience one gets, the easier the job becomes.

 

Tim also has a "Five Days to Sold" System that uses an intensive marketing blitz to create a showing frenzy that creates urgency and offers.

 

Tim is always looking to LinkIn with anyone who is interested in building their social network.

 

View Tim Maitski ●Atlanta Realtor●'s profile on LinkedIn

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Rainer
32,444
Keshia "K" Torruella
Jacksonville, FL
Keshia "K" Torruella

Wow, I try to keep my clients very progressive with checking their credit score and understanding what affects the bottom line, this new monkey wrench is just another hurdle that buyers will have to try an maneuver around.

Thank you for the post

Nov 07, 2010 11:17 PM #1
Rainer
390,804
Nor Yeretsian
Envoy Capitol Realty Inc. - Toronto, ON
Envoy Capitol Realty Inc., Brokerage Toronto

Tim, thank you for this update.

Check your score regularly...

Cheers

Nor Yeretsian

Nov 07, 2010 11:19 PM #2
Rainer
99,757
Bill Byrd
Byrd Realty Group - Virginia Beach, VA
Virginia Beach Real Estate

It's a moving target these days isn't it? The consumer's all need to be paying attention and listening to the advice of solid professionals in these changing times. More than ever we are challenged with having to stay on top of an ever changing real estate world. Great work, good information thanks for the heads up!

Bill Byrd

Keller Williams Realty 

Town Center Virginia Beach

www.ByrdRealtyGroup.com

757-285-6416

Nov 07, 2010 11:48 PM #3
Rainmaker
268,914
Dan Rosenberger
Harvest Realty - Westfield, IN

It will be interesting to see how they go about coming up with a statistical model for potential strategic default.  So much of the current model is based on past record.  Somebody who struggles but makes their payments should score better than the person with a perfect payment record, great ratios and a ton of resources.  I wonder if being in a non-recourse state will be part of this formula.

The new scoring model might help to predict problems for future loans.  But the current problem is based on loans made in the past prior to some price declines.

Nov 08, 2010 01:19 AM #4
Rainmaker
560,551
Tim Maitski
Atlanta Communities Real Estate Brokerage - Atlanta, GA
Truth, Excellence and a Good Deal

Keshia, Always something new to be concerned with.

Nor,  Check it but with something like this, there's not going to be much you can do.

Bill,  thanks for leaving your contact information in case someone reading this wants to easily pick up the phone and call you.  It seems like you are thinking ahead and making it easier for readers.  If they call you because of this post, please send me a referral fee.  My contact information is on my profile page.

Dan,  They will never reveal their secret formula. Only they will know the indicators that they will use to predict future behavior.

Nov 08, 2010 01:44 AM #5
Rainmaker
2,545,062
Rebecca Gaujot, Realtor®
Vision Quest Realty - Lewisburg, WV
Lewisburg WV, the go to agent for all real estate

Tim, great just what we need more changes in January.

Nov 08, 2010 01:35 PM #6
Rainmaker
125,653
Iran Watson
Georgia Elite Realty - Marietta, GA
Marietta Real Estate Agent - Photographer

Interesting.  I don't necessarily agree with "strategic defaults" but I completely understand how it could make sense to some people.  Now the industry responds with a blanket knee jerk reaction.  Guess things are going to have to get a little worse before they get better...

Nov 09, 2010 12:49 AM #7
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Rainmaker
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Tim Maitski

Truth, Excellence and a Good Deal
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