|Lending industry abuse of FICO causing forclosures
|"Fair" Isaac's computer models, under governement sanction, destroy American lives
Imagine a country where:---
The government has blindly handed
control of the entire lending industry over to a private company, which authors complex, statistical computer models
on every aspect of the finances of every person, placing all onto a Marxist macro-economically constructed bell curve.
Imagine this government inacting laws that make the parameters of this scoring system unknown to all, even lenders
themselves. One might ask, "If the lenders don't understand how it works, why do/would they ascribe to in? Time for
some answers here:===
Essential groundwork to understanding what FICO scoring is, does, how it is abused by corporate
greed-mongers, requires precise definitions and a baseline of concepts and practices of which it is primarily comprised.
The most commonly used method of evaluating one's credit worthiness is often refered to as a "credit score."
This is a misnomer, and here's why:--
"SCORE"-- what is a score? Any kind of score? How is a
score determined? It is here that I introduce two sets of opposing parameters that constitute a score, in any context,
framework, or milieu. These are:--
OBJECTIVE versus SUBJECTIVE,
RELATIVE VERSUS ABSLOUTE.
In school, when one takes a test or examination, the subject matter itself is often reflected directly
in the score a student receives. Mutiple choice, and most mathematical tests are examples of this. An answer is either right,
or wrong, and with exception to complex operations sometimes involved in proofs, matrices, etc.... if the final answer is
incorrect, its relative value for determining the student's score or grade, is deducted from a total possible score of
100%:-- no errors. Come up with the right answer, and you get the points; fill in the wrong oval with your #2 soft pencil,
and you don't get credit at all. This is ABSOULTE scoring.
Another good example of ABSOLUTE scoring is seen every
day in sports. A home run is just that-- what you see is what you get.
Sometimes an entire class of students
will all do poorly on an exam. This is most commonly a reflection of poor teaching and presentation of the course material,
and a professor may elect to SCALE the scores, resulting in grades different from those that would be given if it were based
strictly upon how the students performed. I went to Harvard, and have been in a class of 40 students, where the best score
on an exam was 81:-- a B-. Of the remaining 39, 7 get C's, 20 get D's, and the other dozen flunk.
professor decides to SCALE the grades, most of the students will end up with a better outcome than thier actual performance
reflects and merits. In comes RELATIVE scoring, where the teacher places the actual numerical or letter grades onto a bell
curve, and each student walks away with a mark reflective of how well they did, as opposed to everyone else in the class.
At Harvard I only encountered this once, with distribution of numerical score similar to my example above. I had 69 points
on the midyear, and 61 on my final. My letter grade for that semester came in as a C+.
Now onto bigger and
blighter things:-- SUBJECTIVITY vs. OBJECTIVITY.
Delving into the academic aspects of grading students upon essays
written at the time of the exam, term papers, oral presentations, and fields of study where there is no concretely quantifiable
measure of absolute correctness, the SUBJECTIVITY horseman comes riding into town. I've aced take-home exams with essays
I thought were awful [not just thought.... I knew.] I also know what it's like to write a paper I feel is superb, and
have it come back with C-/F, try again, you've got another week. Every subjective evaluation requires human intercession
at many, many levels, certainly not like what a machine oval reader spits out after examinations on more concrete subjects
are run up against a template of correct answers=== et voila, your score...
Incenpted and embrassed by Congress
during an economic boom, with the dotcom revolution fueling unprecendented economic expansion, followed not far behind by
skyrocketing real estate prices, Federal regulations in use for decades were modified to permit automated mortgage underwriting,
a practice still fairly common today. I can say with all certainty that the sheer magnitude and effect upon the American consumer,
and ultimately upon our economy that the greedy credit industry made of this thing could not have been foreseen. At first,
lenders based their decisions upon the overall credit worthiness and strength of a potential borrower's profile, and could
still underwrite a small percentage of Fannie/Freddie mortgage securities, in the form of bond portfolios, usually tacking
on a few thousand extra for closing costs.
This all changed in 1999, when the FCRA was ammended again. This time, the
lobbyists [rich and greedy, wanting to get richer] got everything they could possibly hope for. Petitions for relief under
the unfair and deceptive to be filed in any state, were renderd useless.
PLEASE UNDERSTAND:-- AS AN AMERICAN CONSUMER,
YOU HAVE NO RIGHTS UNDER THE LAW TO SEEK RECOURSE OR REDRESS.
Yes, Congress has eliminated all potential litigation
Rights? YOU HAVE NONE!. The Fico scoring system hangs you there, like a consumed prisoner.
FICO scoring was initially designed for marketers selling high ticket items.
Somebody living in a $2 million palace
is not likely to respond to a letter offing high interest, 18% credit cards that require the same amount to be, any more than
a poor person is likely to be going out Lexus shopping any time soon.
WILLKOMMEN AUS DEM USA! Staling would sit
up in his grave and be singing the Star Spangled Manner.
FICO scoring takes all of the imperical data on your credit
file, which is run off the computer by anyone, any time you apply for credit of any kind.
THE UGLY--- and I mean
this gets UGLY!---
FICO; the catch 22. I buy a house, and take thousands of dollars from mega low credit cards:
isn't it amazing what somebody's defective quackware get me going again.
SUBJECTIVITY; OBJECTIVITY; REDLINING;
BLOCKBUSTING, RACISM all flourish under the current presidential administration. FICO scores run lower in certain zip codes,
higher in others. This is because these abhorent policies are incorporated demographically by zip code.
the PRICE GOUGING, of which I am a direct victim. I have lost over $1.4 million, having been locked into the subprime mortgage
market by virtue of my FICO generated SCORES, this with nearly 15 years of total and absolute flawless credit history; NOT
ONE LATE PAYMENT EVER! Any scoring system designed to evaluate a potential borrowers merit and risk, IS NOT GOING TO STUFF
ANYONE with 15 years of spotless credit performance into any kind of category that mandates that they take sub-prime mortgages,
The big banks, "lobbying" [euphemism for what it really is:- bribery] under the absolute
worst president and administration in the history of the nation have allowed the following to take place:---
of allowing a patently defective, secretized series of computer models to determine to what extent any given consumer
to be price gouged, this built in tiers as one's FICO score goes up or down;
STANDARDIZATION across the industry;
setting score ranges and their corresponding measure to which each consomer is to be leached;
Finally comes UNIVERSALIZATION:---
the second revision of FCRA back in 1999 has stripped the American consumer of ALL RIGHTS OF REDRESS OR RECOURSE UNDER THE
LAW, to contest a FICO score. You're nailed to the cross at that point.
It doesn't take a Masters Degree
in statistics from MIT to know that anyone obliged to make higher mortgage payments because of jacked up interest rates, for
any reason, is more likely to get into trouble and go into default.
I NOW FACE DESTITUTION AND RUIN, due exclusively
to FICO and the way the corporate greedmongers, backed by Bush and his dimwit cronies, have in essence legalized theft from
the public, by virtue of misuse of the FICO scoring computer models.
WATCH THE FORECLOSURE BALLOON MUSHROOM OUT
INTO A BLIMP! Watch the lives and futures of thousands, and then millions, of us American FICOVICTIMS lose our homes,
pay outrageous insurance rates, even for a car, based upon one's FICO score. If you apply for a job or to rent an apartment,
FICO goes into that interview with you. Utilities, credit card interest rates, auto loans, are all determined by FICO scores.
THERE IS NO OTHER PARAMETER BY WHICH YOU CAN BE JUDGED.
YOU HAVE NO RIGHTS, NO REDRESS OR RECOURSE AGAINST
Credit card madness---
AT WHIM, ANY CREDIT CARD COMPANY CAN JACK THE INTEREST RATE ON YOUR ACCOUNT,
EVEN IF IT, AND ALL OTHER ACCOUNTS ON YOUR CREDIT PROFILE ARE IN PERFECTLY GOOD STANDING!
They run your FICO score regularly,
and if the computer model determines that your risk level has increased, due to higher balances or inquiries, they can freely
steal from you.
Universal Default Clause:-- If you go into default on one credit account, say by paying 60 days
late, every other creditor can immediately jack your rate to default level. 4.9% Visa? Not anymore-- now it's 32.9%.
Auto insurance companies have found a statistical consistency between bad drivers and low FICO scores. They use this
as an excuse to jack up your premiums, even if you have a perfect driving record......
I'm sure that if median
FICO scores were run on every American in prison, a similar pattern would appear. Does that mean that we shoud start putting
people with low FICO scores in jail, or maybe we could just keep them on probabtion, even if they've never committed a
crime in their life.........
I've worked in the Real Estate industry for over 20 years, and when a client applies
for an apartment at my agency, they may be 23 years old, a foreign student, and will come in with a FICO score 150 points
higher than my best ever. If they wanted to, they could buy the building, and get better terms and conditions on their mortgage,
this on an income of $22,000. When it's going well for me, I may show an income of ten times that amount, but get shoved
into subprime because of the accursed FICO SCORE......
There is no doubt in my mind that at least 50% of the flood
of forclosures we are seeing today have been caused by how the FICO scoring models are used to feed the great hogs of greed
sitting at the top. Now they're paying the piper, as I predicted years ago in educational forums on this subject, www.bayhouse.com and www.creditforum.org. User name Douggieboy.
I took on a very lucrative project on Cape Cod 2 years ago, and it failed because of the
horrendously absorbatent interest rates I was forced to pay due to my FICO score, constantly floating between 610 and 660,
never good enough to get a prime loan product. Daisy chain refinances through price gouging lenders and mortgage brokers to
keep the cash flow going, people I've worked with for years wanting to underwrite my loans, but unable to do so because
I fall a few points short........
FICO scoring, and its aggregious abuse by the lending industry, is ruining lives
all over this country; in 1999, I predicted that it could precipitate a depression on a scale not seen since the dust bowl
days of the 1930's...
I have extensive documentation, character references, and witnesses to the fact that
FICO has locked me out of competitive rate mortgage programs for the 10 years it has now been controlling the industry.
One more important note:--- Any person's FICO score may change at any time, even though their financial situation
remains stable. This is because everyone is placed onto a great bell curve with millions of others. The score is relative
to the others on the curve a computer model is programmed to be most "like you," in terms of spending and repayment
habits, even what you buy. YOUR SCORE GOES UP AND DOWN BASED UPON HOW OTHER PEOPLE HANDLE THEIR FINANCES, and so does everyone's.
This cannot be any kind of accurate assessment of merit or risk you present to a lender at any particular point in time.
The lending industry itself is no longer a free market enterprise. The ways FICO scoring are used have changed it
into a Marxist macroecnomic money machine, perennial blight upon the American Dream.
I plan to open a blog; inquiries
and questions welcome; media attention at this point could potentially bring this matter into clearer focus for many of the
FICOVICTIMS out there, most of whom are probably not even aware of how their life blood is being sucked away.
Bless; alot more to follow. 10 Years of research here.